GST on Tyres: What’s New

Tyres are far more than a commodity,  they underpin mobility, logistics, agriculture, mining, public transport, and even disaster relief. If the tyre gst rate is too high, the cost ripple effect hits every wheel on the road.

From a government’s perspective, reforming GST on tyres is not just about boosting sales in one industry. It’s about reducing operating costs across vast sectors. Higher transport costs inflate the price of food, construction materials, building supplies and more. Conversely, a well‑designed tax cut on tyres can unlock dual benefits: stimulating demand and easing input burdens elsewhere.

So when we talk of a tyre gst rate new regime or the tyre price after gst cut, we are contemplating real gains (or losses) for farmers, fleet operators, SMEs, and consumers.

 

The status quo: What was the situation until recently

Before September 2025, the landscape for gst on car tyres and other tyres was quite harsh:

 

• New pneumatic tyres (for cars, two‑wheelers, buses, trucks) were taxed at 28 % under GST.
• Tractor tyres and tubes attracted 18 %.
• Bicycle tyres and non‑motorised tyres had much lower rates (5 %) under older classifications.
• Retreaded or used tyres and retreading services were taxed around 18 %.

This created what many in the tyre‑manufacturing ecosystem considered a distortion: classifying such a critical component (literally, “rubber to road”) as if it were a luxury item. The Automotive Tyre Manufacturers Association (ATMA) for years consistently argued that tyres should not be equated with gadgets or discretionary consumption. They pushed for a tyre gst rate of 5 %, at least for key categories, citing affordability and public utility. 

 

So the prior system had two tensions:

1. Cost burden: 28 % is a steep tax for a product that is part of vehicle upkeep, not an optional accessory.
2. Complexity and classification friction: Different rates for tractor, retreaded, etc., created compliance overhead.

 

It was inevitable that in a sweeping GST rationalisation (as the government itself signaled), tyres would come under the scanner.

 

The reform: What’s changing under the tyre gst rate new regime

In September 2025, as part of the broader “Next‑Gen GST” reforms, the GST Council approved major rate rationalisation, effective 22 September 2025. 

 

Here are the key changes for GST on Tyres:

• Most new pneumatic tyres (cars, two‑wheelers, commercial vehicles) see a reduction from 28 % → 18 %.
• Tractor tyres and tubes get a deeper cut: from 18 % → 5 %.
• Bicycle tyres and non‑motorised tyre segments are aligned with 5 %.
• Retreaded tyres and retreading services continue to attract 18 %.
• Tyre tubes and flaps (for non‑tractor use) remain taxed at 18 %.

In effect, the highest slab for tyres (28 %) has been erased. Most mainstream commodities now fall under 18%, and key agricultural or utility tyres have moved to 5%. This is exactly the kind of rationalisation that ATMA and others had long pressed for.

But mere announcement is not the same as realization. The true test lies in how the tyre price after gst cut translates at the ground level.

 

What the numbers say: How much relief do users get?

Let’s break this down in a few illustrative cases, based on real actions by tyre makers.

 

Apollo Tyres, for instance, responded almost immediately. They committed to passing on 100 % of the tax benefit to consumers. Their estimate: depending on the product, savings could range between ₹300 and ₹2,000 per tyre. For a typical car tyre, the drop is reported ~₹300 to ₹1,500. For bus/truck radial lines, ~₹2,000. 

So when you ask, “What is the tyre price after gst cut going to look like?”,  in many everyday use cases, you’ll see material downward revision in list prices, or at least dealer discounting aligned to the new slab. That said, the actual final pass‑through will vary by brand, product mix, dealer margins, cost structure, and local competition.

 

Now, as a decision maker, you would want to monitor whether:

• The full benefit is reaching consumers (not being eaten by margins).
• The new base price (inclusive of 18 % tax) leaves margin room for manufacturers and dealers.
• Demand elasticity kicks in: will lower gst on car tyres and others stimulate enough volume growth to compensate for the lower rate?

 

It’s instructive to note that after the rate cut, the volumes in some segments are projected to rise. As tyre makers lower prices, more users (especially in rural or cost‑sensitive markets) may replace worn tyres earlier, or buy better products. That stimuli effect helps offset revenue loss per unit.

 

Benefits: Why this is a smart move (if executed well)

From a policy perspective, here are the strategic upsides:

 

1. Reduced operating costs in transport and logistics
   Tyres are a nontrivial share of maintenance costs. Lowering gst on tyres reduces the cost per ton‑km. That relieves cost pressures on the movement of goods,  beneficial in a country of long supply chains.
2. Relief for agriculture and small business
   Farmers, rural fleets, tractors, and light commercial vehicles stand to benefit. In particular, the 5 % rate for tractor tyres is a strong signal that the government acknowledges the necessary distinction between luxury items and agricultural inputs.
3. Encouragement of safer replacement behavior
   If tyres are less expensive (post‑GST cut), users may be less reluctant to replace ageing tyres. That helps road safety, fuel efficiency (bad tyres increase fuel consumption), and reduces breakdowns.
4. Demand stimulus & industry growth
   The tyre sector is capital intensive with high fixed costs. Reducing tyre gst rate gives breathing room to manufacturers to increase capacity utilisation. As cost barriers shrink, demand can grow,  especially in underserved markets.
5. Simplicity and fairness
   Moving from 28% to 18%, and rationalising down to two or three slabs, reduces classification disputes, litigation, and compliance burden. It also makes the tax treatment appear more equitable.
6. Political optics & broader reform credibility
   A tax cut in an essential sector like tyres strengthens the narrative of “relief to the common man,” aligning with broader GST 2.0 messaging. It shows that the government is willing to ease taxation not only on basic goods, but on essential components of commerce.

 

Risks, caveats, and things to watch

No reform is free of trade‑offs, especially in taxation. Here are the pitfalls to guard against, especially in the context of the tyre gst rate reform:

 

1. Revenue loss and fiscal balancing
   The government needs to make sure that state revenues do not suffer irreversibly. If the demand response is weak, or passing through is low, revenue loss may not be offset by volume gain. Thus, careful modelling is needed.
2. Partial pass‑through / margin capture
   If manufacturers or dealers do not pass on the full benefit, the public sentiment will sour,  this becomes a credibility issue. Ensuring transparency, possibly with regulatory oversight or requiring revised MRP ceilings, might be considered.
3. Cost pressures remain
   The tyre industry is heavily exposed to global commodity prices,  rubber, chemicals, synthetic polymers, crude oil (for processing and transport). Even with a GST cut, inflationary input costs might dilute the intended relief.
4. Winners vs losers
   Segments such as retreaded tyres, specialty tyres, or niche performance tyres still taxed at 18 % might feel relatively disadvantaged. Also, differential rates can reintroduce classification disputes.
5. Implementation friction
   Updating billing systems, software, point‑of-sale systems, dealer networks across India is a massive logistical task. Errors in tax rates, mismatches in ITC (input tax credit) claims, or rebate miscalculations can lead to disputes or supply chain friction.
6. State reactions
   Since GST is shared revenue between Union and states, states might resist aggressive cuts. Some states may argue for compensatory measures or be wary of sudden fiscal deficits.
7. Short‑term versus long‑term gains
   In the short term, the reform may create enthusiasm and volume jumps (especially around festivals or purchase cycles). But sustaining those increases needs complementary support,  fleet modernization, road infrastructure, and access finance.

 

What decision makers (you) should focus on

If I were advising the government or a senior industrial policy cell, here are key actions and metrics to prioritize:

Focus Area	Key Action	Metric / Indicator to Monitor
Monitoring pass‑through	Require tyre manufacturers to publish pre‑ and post‑tax savings, with dealer audits.	Average reduction in list price per tyre, percent of benefit passed.
Demand elasticity	Commission market studies to gauge how much demand increases per % price drop.	Volume growth (units sold) in 6‑12 months vs prior trend.
Fiscal impact control	Monitor revenue shortfall monthly and initiate compensatory adjustments if required.	State GST revenue trends, central’s wheeling of compensatory grants.
Support for vulnerable segments	For off‑grid or rural markets, offer credit or subsidy linkages to tyre replacement.	Increase in tyre replacement rates in rural districts.
Implementation audits	Scrub point-of-sale systems across dealers and enforce correct invoicing.	Discrepancy cases, mismatches in ITC claims flagged.
Long‑term pricing discipline	Encourage competition so that firms cannot exploit temporary tax relief to widen margins.	Margin swings, competitor pricing behavior.
Input cost buffer	Stabilize import duties or raw material tax regimes to prevent upstream cost shocks.	Price movements in natural rubber, synthetic polymers.

Achieving the tyre price after gst cut in spirit (not just on paper) requires oversight.

 

Conclusion

The cut in GST on Tyres from the 28 % slab to 18 %, and targeted relief for tractor and bicycle tyres down to 5 %, is a major structural shift. It reflects the government’s willingness to reclassify parts of the industrial chain that were previously taxed as “luxury” into the “utility / industrial input” category. That’s a subtle, but important reorientation of tax philosophy.

For many stakeholders,  fleet owners, small businesses, farmers, transporters,  this is a big win in principle. But the true value depends on how faithfully the reform is passed on. This is not a time for lax oversight. It is a moment to ensure that the tyre gst rate new norms become reality in every corner, not just in pricing sheets.

If managed well, this reform can set off a virtuous cycle: lower costs → higher usage/earlier replacement → stronger industry volumes → increased employment/investment → better tax base over time. But if mismanaged, it risks being a headline move with muted ground impact.