Synopsis– The recent GST cut in India has made cars under 1200CC more affordable, with price reductions of Rs 40,000 to Rs 60,000 across popular hatchbacks and compact SUVs. The future looks likely to revive the demand in the small car segment, and this would benefit both buyers and car manufacturers.
The latest Goods and Services Tax (GST) changes in India have brought good news for car buyers, particularly buyers looking to buy cars that are small and fuel-efficient within the 1200CC range. The government has reduced the GST on many popular cars, meaning you can expect to pay less for a new small car. The completion of the GST cut will bring an upsurge in demand for the small car in India, which was largely the backbone of the Indian automobile market.
Impact of GST Cut on Cars under 1200CC
The GST 2.0 regime introduced a simplistic two-slab GST system, where most small and mid-size cars fall under the GST rate of 18%. A huge difference from the prior combined GST and cess rates, which were often above 28% for the small cars. Many popular petrol hatchbacks under 1200CC (in engine capacity) will see prices cut by amounts ranging from Rs 40,000 to Rs 60,000, which would directly benefit consumers and boost sales prospects for manufacturers. Now, let’s dive into some of the notable cars under 1200CC that have become more affordable because of the new GST rates:
1. Maruti Suzuki Swift
The Swift is one of the most popular hatchbacks in India and is now available with the new 1.2-litre Z-series with a petrol motor that achieves impressive fuel efficiency by registering nearly 25.75 km per litre, it is also available in S-CNG. This car benefits from the new 18% GST order, forcing down the pricing to start from Rs 6.49 lakh (ex-showroom).
2. Hyundai Grand i10 Nios
This car series is keen to get into the hatchback market again, the Grand i10 Nios has a great hatchback pedigree, using Hyundai’s tested 1.2-litre Kappa petrol engine, which produces 83 PS. The new Hy-CNG version now starts from Rs 5.98 lakh (ex-showroom).
3. Tata Tiago
Competing in the budget hatchback field, the Tiago offers both petrol and CNG options using the Tata 1.2-litre Revotron petrol engine. Being priced from just Rs 4.99 lakh (ex-showroom), the Tiago is a great value for money, and the recent tax cut on gas fuel is only going to make it better for consumers.
4. Maruti Suzuki Baleno
The Baleno is a premium hatchback featuring a 1.2-litre K-series petrol motor along with premium features including all-LED lighting, six airbags, and hill-hold assist. With prices starting at Rs 6.70 lakh (ex-showroom) it has benefited from the GST tax cut down to 18%, and it is equally affordable as well.
Also read: 7 Best Family Cars with 6 Airbags in India Under ₹20 Lakhs (2025)
5. Hyundai i20
The Hyundai i20, a fully-equipped premium hatchback, uses the Kappa petrol engine with a 1.2-litre engine producing multiple variants. With fancy features of digital MID, electric sunroof, cruise control, and others, it has a starting price of Rs 7.04 lakh (ex-showroom) with the GST now reduced.
6. Tata Altroz
This premium hatchback has new styles and better interiors with an electric sunroof and a 10.25-inch touchscreen. It offers the Tata 1.2-litre Revotron petrol engine (with a CNG variation) as well as the unique turbo diesel engine in the new lower tax regime. Ex-showroom prices start from Rs 6.99 lakh.
7. Hyundai Venue
The Venue is a popular sub-compact SUV providing the advantages of hatchback fuel efficiency in a practical SUV format. The venue will have three eligible engine options under the GST cut: a 1.2-litre petrol, 1.0-litre turbo petrol, and 1.5-litre diesel, with a starting price of Rs 7.94 lakh (ex-showroom).
8. Kia Sonet
This Kia car is a sporty sibling to the Venue. The Sonet offers a premium interior design and safety features, including Level 2 of ADAS features in higher versions. It comes with three eligible engines: 1.2-litre petrol NA, 1.0-litre turbo petrol, and a 1.5-litre diesel engine, with prices from Rs 7.99 lakh (ex-showroom).
9. Tata Punch
For buyers interested in a small SUV, especially one with a CNG variant, this is your car. The Tata Punch had the highest volume of sales in 2025. It offers enough room for families and different engine options, including the 1.2-litre Revotron petrol with an iCNG option. The price deals with an ex-showroom cost starting at Rs 6.13 lakh.
10. Skoda Kushaq
For fans of European engineering, the Skoda Kushaq is a nice sub-4-metre premium compact SUV that features a 1.0-litre TSI turbo petrol engine and provides exhilarating performance. It starts at Rs 8.25 lakh (ex-showroom), which applies to the GST cut.
| Car Model | New Price (Rs Lakhs) | Old Price (Rs Lakhs) | Savings (Rs) |
| Maruti Suzuki Swift | 6.49 | 6.96 | 47,000 |
| Hyundai Grand i10 Nios | 5.98 | 6.41 | 43,000 |
| Tata Tiago | 4.99 | 5.44 | 45,000 |
| Maruti Suzuki Baleno | 6.70 | 7.16 | 46,000 |
| Hyundai i20 | 7.04 | 7.53 | 49,000 |
| Tata Altroz | 6.99 | 7.54 | 55,000 |
| Hyundai Venue | 7.94 | 8.44 | 50,000 |
| Kia Sonet | 7.99 | 8.49 | 50,000 |
| Tata Punch | 6.13 | 6.62 | 49,000 |
| Skoda Kushaq | 8.25 | 8.75 | 50,000 |
Why Small Cars Are Benefitting More
Small cars usually have under 1200CC engines, as small cars offer lower base pricing, and GST impacts their total cost. The GST offer, which was typically around 28 percent initially, is now cut to about 18% meaning the upfront cost will reduce significantly. As small cars are much more appealing than alternatives like used cars or two-wheelers, specifically in terms of first-time buyers or consumers who have a budget, then the tax reduction will provide manufacturers with a better opportunity to provide better features within lower pricing brackets.
Broader Market Impact and Outlook
The GST revision includes not only price cuts but also a reduction in the complexity of tax compliance and an improvement in the demand scenario of small and mid-size cars in India. Previously, luxury cars and larger SUVs faced a higher combined tax rate with a different slab that included both GST and cess, therefore, cars above 1500CC were exorbitantly expensive. This reform will allow small cars to obtain relief from a single slab taxation category, which will help attract consumers back into the category. Now we expect that manufacturers will launch updated models and variants under 1200CC to renew consumer interest. For buyers, this means more choice and value for money in small cars in the future.
The Bottom Line
For anyone who is looking for a small car, now is the best time to look for the cars under 1200CC, from the Maruti Alto K10, Swift, to the Hyundai Grand i10, Tata Tiago and Renault Kwid. The most recent GST cut means that these cars have now become more attractive, but will still have their features and performance. The development will drive the sector growth in the automobile world in the small car category in India and give buyers more buying power in owning a dependable and economical vehicle.
Written by Adithya Menon
