GST Council Unveils Simplified Registration Scheme and Major Tax Cuts for Automobiles, Tractors

New reforms promise faster approvals for small businesses and lower GST rates on vehicles and farm machinery to ease the burden on consumers and entrepreneurs

New Delhi, September 4: In a major step towards next-generation GST reforms, the GST Council on Wednesday introduced a simplified Goods and Services Tax (GST) registration scheme designed to make compliance easier for small and low-risk businesses. Alongside this, sweeping changes in GST rates for automobiles and agricultural equipment were announced, offering relief to consumers and industries alike.

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Simplified GST Registration for Entrepreneurs

Under the new scheme, businesses categorized as low-risk through data-driven risk parameters will now be granted automatic GST registration within three working days.

Applicants who voluntarily declare that their input tax credit (ITC) claims will not exceed ₹2.5 lakh per month can also opt into the simplified process. According to government estimates, nearly 96% of new applicants are expected to benefit from this move, reducing bureaucratic hurdles for startups and small traders.

The move is expected to encourage entrepreneurship by ensuring that genuine applicants do not face unnecessary delays or scrutiny during the registration process.

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Big Relief for Automobile Sector

The GST Council also announced significant tax rate cuts for vehicles, a long-standing demand of both the automobile industry and consumers.

• Petrol, petrol-hybrid, LPG, and CNG cars (engine capacity up to 1200 cc and length not exceeding 4000 mm): GST reduced from 28% to 18%.
• Diesel and diesel-hybrid cars (engine capacity up to 1500 cc and length not exceeding 4000 mm): GST reduced from 28% to 18%.
• Three-wheelers, motorcycles up to 350 cc, and goods transport vehicles: GST brought down from 28% to 18%.

This restructuring is aimed at making eco-friendly and compact vehicles more affordable, while also boosting demand in the automobile market.

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Boost for Farmers: Lower GST on Tractors

In a welcome move for the agriculture sector, GST on tractors has been reduced from 12% to just 5%. Tractor tyres and parts, which were earlier taxed at 18%, will also now attract only 5% GST.

The government expects these cuts to lower input costs for farmers and support agricultural growth by easing the financial burden on rural India.

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A Step Towards Inclusive Growth

These reforms mark one of the most consumer- and business-friendly GST overhauls since the tax’s introduction. While small entrepreneurs gain from hassle-free registrations, both urban consumers and rural farmers stand to benefit from reduced tax rates on essential vehicles and equipment.