GST relief fades as luxury car prices return to pre-tax levels within a year
A year after GST rationalisation made luxury cars cheaper by around 5-7 percent, successive price increases by Mercedes-Benz, BMW and Audi have substantially eroded those savings, with some models now costing as much as, or more than, they did before the tax reduction.
The Mercedes-Benz GLA 200, for instance, was priced at Rs 51.5 lakh before the GST changes came into effect on September 22, 2025. Its price subsequently fell to Rs 49.7 lakh but has since climbed to Rs 51.8 lakh, exceeding its pre-GST price by Rs 30,000.
Similarly, the BMW X3 xDrive20d M Sport, whose price dropped from Rs 78.3 lakh to Rs 73.1 lakh following the tax reduction, now costs Rs 78.2 lakh, almost entirely reversing the initial benefit of Rs 5.2 lakh.
The reversal comes as luxury carmakers grapple with a weakening rupee against the euro, rising logistics expenses and higher operating costs. While the lower GST rate remains in place, subsequent manufacturer-led price revisions have reduced the effective savings available to buyers.
Audi India has increased prices twice this year, taking the cumulative increase to around 4 percent, according to Balbir Singh Dhillon, head of Audi India. The company had reduced prices by approximately 6-7 percent following the GST rationalisation.
“We had to take multiple price increases due to the forex fluctuations. The fall in the rupee against the euro last year was 19% and this year it is already 6-7%. All of this is negating the positive impact we had on GST,” Dhillon told Moneycontrol in an exclusive interaction.
