Motor cars and other passenger vehicles, petrol, diesel, CNG and hybrid.
Car falls under HSN 8703, in chapter 87 (Vehicles).
Before 22 September 2025, cars paid 28% plus a compensation cess of up to 22%. Now small cars (within the engine and 4 metre length limits) pay 18%, and all others pay a flat 40% with no cess. Ambulances fitted at the factory are 18%, and fully electric cars stay at 5%.
| Code | Description |
|---|---|
| 870321 | Petrol cars up to 1000 cc |
| 870322 | Petrol cars above 1000 cc up to 1500 cc |
| 870323 | Petrol cars above 1500 cc up to 3000 cc |
| 870332 | Diesel cars above 1500 cc up to 2500 cc |
| 870340 | Petrol hybrids, not plug in |
The GST rate on car is 18% or 40%. Before 22 September 2025 it was 28%. 18% on small cars: petrol, LPG or CNG cars up to 1200 cc and diesel cars up to 1500 cc, in each case not longer than 4000 mm (hybrids follow the same limits). 40% on all larger cars. Compensation cess no longer applies. Electric cars are 5%.
| GST rate | Within a state | Between states |
|---|---|---|
| 18% | CGST 9% + SGST 9% | IGST 18% |
| 40% | CGST 20% + SGST 20% | IGST 40% |
Compare other goods on the GST rates list.
The number of digits depends on your aggregate turnover in the previous financial year.
| Turnover last year | Digits | Write |
|---|---|---|
| Up to Rs 5 crore | 4 on B2B invoices, optional on B2C | 8703 |
| Above Rs 5 crore | 6 on every invoice | 870321, 870322, 870323 |
| Export or import | 8 on the shipping bill or bill of entry | From the Customs Tariff, chapter 87 |
Here is how a line for car looks on a tax invoice within one state: 1 × car at Rs 6,50,000.00 each, taxed at 18%. The figures are an example, not a market price.
| Item | HSN | Qty | Rate (Rs) | Taxable (Rs) | CGST (Rs) | SGST (Rs) | Total (Rs) |
|---|---|---|---|---|---|---|---|
| Car | 8703 | 1 × car | 6,50,000.00 | 6,50,000.00 | 58,500.00 | 58,500.00 | 7,67,000.00 |
Sold to a buyer in another state, the same line carries IGST of Rs 1,17,000.00 instead of CGST and SGST. Make the full invoice with the GST invoice format: it fills in the tax split, round off and amount in words.
Chapter 87 (Vehicles) covers: Tractors, cars, buses, trucks, motorcycles, bicycles and their parts.
Products often bought, sold or invoiced together with car:
Car falls under HSN 8703: motor cars and other passenger vehicles, petrol, diesel, CNG and hybrid. Common 6 digit codes are 870321 for petrol cars up to 1000 cc and 870322 for petrol cars above 1000 cc up to 1500 cc.
18% on small cars: petrol, LPG or CNG cars up to 1200 cc and diesel cars up to 1500 cc, in each case not longer than 4000 mm (hybrids follow the same limits). 40% on all larger cars. Compensation cess no longer applies. Electric cars are 5%.
If your aggregate turnover in the previous financial year was up to Rs 5 crore, write the 4 digit code 8703 on B2B invoices (optional on B2C invoices). Above Rs 5 crore, write 6 digits, such as 870321, on every invoice. Shipping bills and bills of entry need the full 8 digit code from the Customs Tariff.
Most SUVs are longer than 4000 mm or have bigger engines, so they pay 40% GST with no compensation cess since 22 September 2025.
Rates checked on 13 October 2026 against the GST rate notifications in force (GST 2.0 from 22 September 2025). Descriptions are in our own words and are a guide, not a ruling: for a disputed or high value item, check the notification or ask your tax adviser.