Under the existing structure, higher-end SUVs attracted 28% GST plus up to 22% compensation cess, taking the overall tax burden to 43-50%. With the new framework, 40% of M&M’s SUV portfolio will fall under the 18% slab, while the remaining 60% will face a tax rate lower than the current levels.Almost 60% of M&M’s total auto volumes, including commercial vehicles, will now be taxed at 18%.
Meanwhile, tractors, which account for nearly 30% of revenue, will move to the 5% slab from 12% earlier. Tractor parts will also attract just 5% GST.
M&M shares have underperformed peers in 2025, rising only 9% so far compared to Maruti Suzuki’s 40%. Still, strong double-digit growth in SUVs, despite an overall auto sector slowdown, provides a supportive backdrop for the stock.
M&M to pass on GST cuts fully
M&M will pass on the entire benefit of the GST cut to customers. With the latest tax overhaul, almost 60% of M&M’s total auto volumes, including commercial vehicles, will now fall under the lower 18% GST slab.
“This will lead to (tractor) prices coming down by ₹40,000 to ₹60,000 depending on the horsepower category,” said Rajesh Jejurikar, Executive Director and CEO – Auto & Farm Sector, M&M. The company sells about 35,000-40,000 tractors a month.”Overall, if you leave out the 40%, we have a very large chunk of volumes including pickups and SUVs in the 18% slab and then we have tractors and EVs in 5%,” he said.
However, the company does not expect any immediate gains during the festive season. “There is limited time to capitalise the upside in the festival period. We have literally 20 days away… We can’t increase capacities or production outputs,” Jejurikar added.
Some buyers may wait until the new rates take effect on September 22, which could affect September volumes.
Anish Shah, Group CEO and MD of Mahindra Group, said the reforms could “propel India to an eight to 10% growth rate overall.”
Shah said the reforms should also encourage private investment. “This could be the one factor that starts driving that private investment,” he said, adding that the company has already started looking at supply expansion to meet future demand.
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, has approved a simplified two-slab GST structure of 5% and 18%, with a special rate of 40% on sin and luxury goods. The existing 28% and 12% slabs will be scrapped.
This decision confirms multiple CNBC-TV18 newsbreaks on GST rationalisation, first hinted at by Prime Minister Narendra Modi in his Independence Day address on August 15.
The revised GST rates will come into effect from September 22.
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