Taxes on cars have long been a hot topic, as they significantly increase the overall cost of a vehicle. Under the Goods and Services Tax (GST) system, these taxes play a major role in determining the final price. Understanding how car taxes work can help you make a well-informed purchasing decision.
A K Mandhan, a SEBI-registered Research Analyst, recently shared insights on social media platform X, shedding light on the hefty taxes car buyers in India face. He explained that purchasing a car involves a 28% GST, up to 20% cess, and an additional 8-12% road tax.
For example, the Mahindra Thar, priced at ₹11.65 lakh ex-showroom, ends up costing around ₹20.60 lakh on-road, with taxes alone accounting for a staggering ₹7.95 lakh.
Purchasing a car in India is the biggest scam.
— A K Mandhan (@A_K_Mandhan) March 27, 2025
first u earn money and pay tax then
You pay 28% GST + 20% Cess. On top of that on an average 8-12% road tax.
Pre-GST cost of Thar car is 11.65 lakh and on road is around 19.60 lakh.
There is a tax of Rs 7.95 lakh on a car worth… pic.twitter.com/0EHoK77euc
A K Mandhan highlighted the financial burden faced by middle-class car owners in India, noting that even those driving a basic ₹8 lakh car pay the same price for fuel as luxury car owners driving BMWs or Mercedes. Additionally, they incur expenses like toll tax, fuel, and insurance without any exclusive benefits.
Mandhan expressed his strong views in a post on X, stating:
“Purchasing a car in India is the biggest scam. First, you earn money and pay tax. Then, you pay 28% GST + 20% cess, along with an 8-12% road tax. The pre-GST cost of a Mahindra Thar is ₹11.65 lakh, but the on-road price is around ₹19.60 lakh—meaning a tax of ₹7.95 lakh on a car worth ₹11.65 lakh. A middle-class driver pays the same for fuel as a BMW owner while also covering toll tax, petrol, and insurance.”
This observation underscores the heavy tax burden on Indian car buyers, making car ownership an expensive proposition.
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