The Goods and Services Tax (GST) overhaul—often dubbed GST 2.0—approved by the GST Council earlier in September 2025, has introduced sweeping changes in how large SUVs are taxed in India. One of the most consequential beneficiaries is the Mahindra XUV700. Here’s a full look at what has changed, the impact, key numbers, and what prospective buyers should know.
What’s Changed: Key GST 2.0 Reforms for Large SUVs
- Uniform 40% GST slab for large SUVs / luxury cars
Under the new tax structure, vehicles that are over 4 metres in length and have engine capacity exceeding 1,500 cc will now attract a flat 40% GST, with no additional compensation cess. This replaces the earlier system which involved a 28% GST base plus a cess that could raise the total tax burden to ~48-50%. - Date of effect
Though the revised GST slabs are officially set to take effect from 22 September 2025, automakers like Mahindra have begun passing on the GST benefits earlier — from 6 September 2025 in many cases.
What Was the Earlier Tax Burden
- Under the old regime, large SUVs like XUV700 were generally taxed as follows: Tax componentRate / conditionGST base rate28%Compensation cessUp to 22% (depending on vehicle size etc.)Total effective rate~48-50% for large SUVs above thresholds
- These tax components also inflated other costs such as RTO charges, insurance, registration, etc., since many are calculated as a percentage of the ex-showroom price.
What the New Tax Means for XUV700 Buyers: Savings, Variants, and Real Impacts
- Amount of price drop
Mahindra has announced that the XUV700 will become cheaper by up to ₹1.43 lakh for certain variants (top/feature-rich trims) thanks to the new tax slab. - Variant-wise savings
The drop varies by trim. For example:- Base / entry trims see lower savings (but still positive) compared to fully-loaded trims.
- Higher-end trims (e.g., those with more features or premium equipment) benefit more in absolute terms because the tax applies on a higher base price.
- Effective tax rate now vs before
The total tax rate on XUV700 has dropped from the ~48% mark (GST + cess) to 40% flat under the new regime, eliminating the additional cess. - Timing of the price reduction
Buyers can already see the reduced ex-showroom prices in many Mahindra dealerships and online platforms for ICE (internal combustion engine) variants.
Significance & Broader Impact
- Improved affordability
The drop of roughly ₹1.4-1.5 lakh for high-end trims makes the XUV700 more accessible. For many, the lower upfront cost combined with lower taxes on registration and insurance may reduce the overall cost of acquisition. - Stimulus to sales in the large SUV segment
Automakers anticipate that the new tax regime will spur demand, particularly for large SUVs, which previously had very high tax burdens. The removal of the cess simplifies pricing as well. - Competitive repositioning
Brands with SUVs in the same size/engine category (e.g., Fortuner, Safari, Scorpio-N etc.) will also adjust pricing. Buyers comparing across models will now have lower cost differentials.
Things to Watch Out For (Risks / Caveats)
- On-road cost vs ex-showroom price
While the ex-showroom price comes down, on-road cost includes registration (RTO), insurance, handling charges, etc. Some of these scale with ex-showroom value, so savings there will help but may be marginally offset. - Variant availability and configuration
Features impact base price. If certain trims have high cost add-ons, the savings (in rupees) will be larger, but percentage-wise less. Buyers should check variant-wise price lists. - Dealer mark-ups, freight, GST implementation delays
Some dealers may delay reducing prices or pass on benefits unevenly. Buyers should confirm the new price specific to their city and variant. - Imported vs domestically built models
If a variant involves imported parts or is imported (CBU), additional import duties / levies may apply; changes in those may or may not align with GST 2.0.
What Should Prospective Buyers Do
- Check exact ex-showroom price in your city for your desired variant once the GST change is live.
- Compare variant-wise savings include not just base price drop, but registration and insurance.
- Time purchases: since Mahindra and others have already announced new prices (as early as Sept 6) ahead of formal implementation, buying sooner under revised rates may lock in savings.
- Assess feature vs price value: if saving is significant, one might opt for a higher trim which earlier may have felt too premium.
- Watch elections/events/festive season: tax reforms often coincide with festive sales, but also with supply/demand shifts (could affect waiting periods, incentives.
GST 2.0 marks a major rationalisation of the tax regime for large SUVs in India. For the Mahindra XUV700, this means a meaningful cut in the tax burden — from a combined ~48-50% to 40% — and up to ₹1.43 lakh in savings for certain trims. While this does not erase all costs associated with owning a large SUV, it is likely to improve affordability, increase demand, and tighten competition among manufacturers. For buyers, understanding the variant-wise impact, comparing on-road costs, and acting after confirming local pricing will be key to making the most of this tax overhaul.
Last Updated on: Friday, September 12, 2025 4:24 pm by Business Byte Team | Published by: Business Byte Team on Friday, September 12, 2025 4:24 pm | News Categories: Business
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