Will The E20 Fuel Rollout Make The GST Benefit Ride Bumpy?

The GST rate cut will benefit most car and two-wheeler buyers, but the E20 fuel rule may upset your budget. Calculate well and plan ahead for a smooth ride

- Ayush Khar

Traditionally, a lot of Indians hold off big-ticket purchases like a house or a vehicle for the Diwali season to rake in festive discounts and to align with the auspicious period. Vehicle sales tend to peak in the festive season around October-November each year. This year, the reduction in the goods and services tax (GST) on smaller vehicles is an additional Diwali bonus for many buyers.

Data from the Federation of Automobile Dealers Associations (FADA), the apex national body of automobile retail in India, shows a significant uptick in vehicle sales in October 2024, with 483,159 units sold, more than any other month of the year. A similar buying spree is anticipated for this year as well.

This year, vehicle buyers need to keep in mind two major changes: the GST revision and the broad-based adoption of ethanol-blended E20 fuel, which leads to lower fuel efficiency, according to experts. All vehicles manufactured post 2023 are compatible with E20 fuel, which was rolled out in April 2025.

The two changes are set to change the total cost of ownership (TCO) of the vehicles. TCO is a comprehensive metric which takes into account all the major expenses linked to the vehicle throughout its life cycle, right from the day of the purchase to the day it's sold or disposed of.

While the GST revision is likely to lower the TCO for many buyers, the addition of E20 into the matrix has left many buyers confused. Let's break it down to understand more, to help you make the right decision.

The GST Impact

The GST rate on personal vehicles has now been restricted to two slabs from September 22–18 per cent and 28 per cent. This is expected to stimulate demand in the automobile sector.