Car prices drop with revised GST slabs—here’s how much you can save on EMIs from banks like SBI, HDFC, ICICI, Axis, and more.
India’s new GST reforms are bringing good news to car buyers. The updated tax structure, which lowers GST rates on small cars and eliminates cess on luxury vehicles, is not only reducing car prices but also making vehicle loans more affordable.
Here’s a detailed comparison of car loan EMIs from top banks like SBI, HDFC, ICICI, Axis, and Kotak, showing how the reduced GST impacts your monthly payments.
What’s Changed in GST Rates for Cars?
The GST Council has streamlined tax slabs to make vehicles more accessible for the average Indian:
- Old GST Structure: 5%, 12%, 18%, and 28% slabs
- New GST Slabs (from Sept 22, 2025): Only 5% and 18%
- Small cars: Now taxed at 18% instead of 28%
- Luxury cars & SUVs: Flat 40% tax, but without any additional compensation cess
This means small and mid-sized car prices are coming down, directly reducing your loan amount and monthly EMIs.
How Much Will You Save on Car Loan EMIs?
Let’s take a car priced at ₹15 lakh earlier, which now costs around ₹13.5 lakh after the GST cut.
| Bank | Interest Rate | EMI on ₹15L (5 yrs) | EMI on ₹13.5L | Monthly Savings |
|---|---|---|---|---|
| HDFC / ICICI / Axis Bank | ~7% | ₹29,700 | ₹26,700 | ₹3,000 |
| Kotak Mahindra Bank | ~8% | ₹30,400 | ₹27,400 | ₹3,000 |
| Canara Bank | ~8.7% | ₹30,800 | ₹27,700 | ₹3,100 |
✅ Over 5 years, these savings add up to over ₹1.8 lakh in reduced EMI and interest burden.
A Comparison of Vehicle Loans From Top Banks
Here’s how vehicle loans stack up across India’s leading banks:
1. HDFC Bank
- Interest Rate: ~7%
- Pros: Quick disbursal, wide dealership network
- EMI (Post-GST): ₹26,700 for ₹13.5 lakh loan
2. ICICI Bank
- Interest Rate: ~7%
- Pros: Attractive offers for salaried individuals
- EMI: ₹26,700
3. Axis Bank
- Interest Rate: ~7%
- Pros: Up to 100% on-road financing
- EMI: ₹26,700
4. Kotak Mahindra Bank
- Interest Rate: ~8%
- Pros: Flexi EMIs and online pre-approval
- EMI: ₹27,400
5. Canara Bank
- Interest Rate: ~8.7%
- Pros: Lower processing fees
- EMI: ₹27,700
Key Takeaways
- Car prices have dropped by up to ₹1.5 lakh in some segments due to the GST cut.
- EMI savings of ₹3,000/month or more depending on your bank and interest rate.
- Best time to buy: With reduced taxes + competitive loan rates, now is ideal to purchase a car.
- Always compare bank offers based on interest rate, processing fee, and loan tenure flexibility.
