ZigOpinion: Will GST 2.0 Help Boost Sales This Diwali?

What does Diwali mean? New clothes, sweets and firecrackers, right? What if you take it one step ahead by bringing home a brand new car? Our beloved Nirmala Sitharaman, the finance minister of the country, has already put things in motion to make your dream of buying a new car on Diwali closer to reality. 

How? Well, the landmark day last month, i.e., September 3, 2025, turned the tables for the Indian automotive industry. Nirmala announced that from September 22, a new set of GST norms will come into effect, making owning and buying new cars more affordable than it has been in the recent past. 

Cars have already become cheaper ever since the announcement. First through pre-GST discounts, then with the overall price cut through GST 2.0. And since it’s one of the biggest festivals ever in the year, manufacturers won’t shy away from giving out massive discounts on cars just to attract more customers. 

And why shouldn’t they? Barring a few occasions, it’s mostly a seller’s market where there are fewer buyers of new cars, but the festive season is when the tables actually turn. Customers become more demanding, and brands can’t risk losing out on buyers by not giving discounts. And giving discounts is a sure-shot way of attracting Indian buyers, I mean, who doesn’t love a good deal?

What is GST 2.0 Exactly?

So, with the monetary gifts from the finance ministry(GST cuts) and car OEMs, it becomes the best time to buy a new car. If you’ve been living under the proverbial (or even an actual) rock, let’s jog your memory a bit. Cars under 4 metres in length with engines no larger than 1200 cc (petrol) or 1500 cc (diesel), GST has been reduced from 28 percent to 18 percent, which is a huge sum of money that buyers won’t have to cough up. The reduced rates are not just limited to this segment of cars. Even luxury cars have become cheaper despite the GST being increased from 28 percent to 40 percent, but in doing so, the finance ministry has removed the additional cess. 

Why did the government do this? Simply put, it wanted the car-buying process to become cheaper and the experience to become less of a hassle. It was done in a bid to revive the slowing demand for new cars and get the consumers to spend more money. 

The GST 2.0 has drastically affected the prices of sub-4-metre cars. Models like the Citroën C3’s base-spec variant cost less than Rs 5 lakh (ex-showroom, India), and the Tata Punch’s starting price is now the same as it was when it was launched in 2021 (Rs 5.49 lakh).

Diwali Discounts

While the festive season is the best time to buy a new car, it may only hold true if you act in time. Very popular models, which currently command a long waiting period, will definitely become harder to get. That, too, depends on how well dealerships have stocked their yards. Other not-so-popular models shouldn’t be so hard to procure. You get cash discounts, exchange bonus, corporate and loyalty benefits to sweeten the deal. Add to that the reduced prices because of the new GST structure, and it’s one sweet, sweet deal buying a car this time. 

Will This Boom Be Sustainable?

What happens after the festive season is over? Will the market see a decline in sales after Diwali, as it has generally been the case? The hit could be even harder given that the GST 2.0 price cut, along with discounts, will help entice new customers, but it could be very, very short-lived. 

ZigSays…

The combination of GST 2.0 implementation and Diwali will definitely help boost sales for manufacturers, but will they be able to sustain it? Historically, the festive season in India does take away a major chunk of the demand as and when it finishes, and the same will happen this year too. It’s just that the demand during the festive season will be much higher.