GST 2.0 Could Boost Commercial Vehicle Sales, Says Ashok Leyland CFO: GST Rationalisation May Give Relief to CV Buyers

Key Highlights

• GST 2.0 may cut the CV tax from 28% to 18%.

• Small fleet owners and new buyers to benefit the most.

• The current chassis-body tax difference is to be removed.

• CV sales may rise strongly in FY26.

• Reform could add 0.2% to India’s GDP growth.

Ashok Leyland’s Chief Financial Officer (CFO), KM Balaji, believes that the upcoming GST 2.0 reform could play a big role in boosting demand for commercial vehicles (CVs). He explained that if the GST rate on CVs drops from 28% to 18%, it will encourage more people to buy trucks and buses, especially small fleet owners and first-time buyers.

Currently, both CV chassis and fully built vehicles attract 28% GST. But if a customer purchases only a chassis and gets the body built separately, the service of building the body is taxed at just 18%. This has often led buyers to split purchases to save tax. A uniform 18% GST rate will simplify the process, allowing customers to buy vehicles without extra steps.

What GST 2.0 Means

The government is preparing to simplify the current GST system, which now has four slabs: 5%, 12%, 18%, and 28%. Under GST 2.0, there will be only two slabs: 5% and 18%. Many goods in the 12% slab may shift down to 5%, while items in the 28% slab, including commercial vehicles, are expected to move down to 18%.

If commercial vehicles are reclassified under 18%, it will provide major relief to buyers. A 10% reduction in GST will significantly improve affordability for small fleet owners and new buyers. Larger fleet operators may not feel a direct impact since they usually adjust GST with tax liabilities, but overall industry demand is expected to rise.

Benefits for Small Fleet Owners

According to Balaji, the biggest winners will be small fleet owners. For them, even small cost savings make a big difference. Lower tax rates will make it easier for them to purchase vehicles, reduce confusion around chassis and body purchases, and bring more new players into the transport sector.

This change could also revive retail sales of CVs, which have been under pressure in recent months. With simpler tax structures and reduced upfront costs, sales are expected to gain momentum in FY26.

Wider Impact on the Economy

The positive impact of GST 2.0 will extend beyond the CV industry. Reports suggest that the reform could add nearly 0.2% to India’s GDP growth. It could also help balance the negative effects of tariffs in other industries. This highlights that GST 2.0 will not just benefit truck and bus buyers but also boost overall economic activity.

No Change in Pricing Strategy

Ashok Leyland has also clarified that the GST changes will not directly raise company profits. Since GST is collected on behalf of the government, the benefit will go directly to customers. However, a lower GST rate may help reduce working capital requirements. Vehicle prices themselves will remain unchanged, ensuring that the tax benefit is fully passed on to buyers.

Looking Ahead

The commercial vehicle industry is closely watching the government’s final decision on GST 2.0. If CVs are shifted from the 28% slab to 18%, it will be a game-changer for small operators and retail sales. It will also simplify taxation, boost demand, and support the long-term growth of the transport sector.

Also Read: EKA Mobility Delivers Three Electric Buses to AIIMS New Delhi

CMV360 Says

GST 2.0 could be a turning point for India’s commercial vehicle industry. A lower GST rate from 28% to 18% will simplify taxation, reduce costs for small fleet owners, boost sales, and support overall economic growth. While Ashok Leyland will not directly profit from this reform, buyers will benefit, and the industry may see strong growth in FY26.