Ashok Leyland CFO: GST 2.0 Likely to Drive Commercial Vehicle Demand

By Amit Jangra | Published Date : August 30, 2025

Ashok Leyland CFO sees GST 2.0 cutting commercial vehicle tax from 28% to 18%, likely boosting demand for buses, trucks and small commercial vehicles.

A possible change in India’s tax structure may soon give a strong push to the commercial vehicle (CV) industry. According to KM Balaji, the Chief Financial Officer of Ashok Leyland, the upcoming GST 2.0 reform could help boost the demand for buses, trucks and small commercial vehicles, especially among small business owners.

What Is GST 2.0 and Why It Matters

Table of Contents

1. What Is GST 2.0 and Why It Matters

2. Why This Could Boost Truck and Bus Sales

3. Small Fleet Owners Will Benefit Most

4. What About Large Fleet Operators?

5. The Big Picture: GST 2.0 and the Economy

6. Ashok Leyland’s Position

7. Looking Ahead

Read More: Tata Motors Launches 9-Seater Winger Plus with Rs 20.60 Lakh Price Tag

Currently, the Goods and Services Tax (GST) system in India has four main slabs: 5%, 12%, 18% and 28%. Most commercial vehicles — whether just the chassis or fully built trucks and buses — fall under the 28% slab. That’s a pretty high tax.

But under GST 2.0, the government is planning to simplify the tax system by reducing it to just two slabs: 5% and 18%. If CVs move down from the 28% to the 18% bracket, that would mean a direct 10% drop in tax rates.

Why This Could Boost Truck and Bus Sales

This change could make a big difference. Right now, some buyers try to reduce costs by buying only the chassis and getting the vehicle body built separately. This is because the body-building service is taxed at just 18%. It adds unnecessary steps to the buying process.

Balaji pointed out that if the entire vehicle is taxed at 18%, buyers won’t need to go through these extra steps anymore. It will make buying a truck or bus simpler, faster and cleaner from a tax point of view.

Small Fleet Owners Will Benefit Most

According to Ashok Leyland’s CFO, this tax cut will especially help small fleet operators and first-time buyers. These are the people who feel every rupee when buying a new vehicle. A 10% drop in GST can make commercial vehicles more affordable, helping them grow their transport businesses.

Also, this could lead to more people entering the logistics and transport sector. If trucks and small commercial vehicles become easier to own, the industry could see more competition, better services and more jobs.

What About Large Fleet Operators?

For big companies that own dozens or even hundreds of buses or trucks, the impact may not be as direct. They often adjust the GST they pay with the GST they collect on services. But even for them, simpler tax rules can help with cash flow and working capital management.

So while the tax savings may not show up as direct profit, it will still improve business operations across the board.

The Big Picture: GST 2.0 and the Economy

It’s not just the truck or bus sector that stands to gain. Experts believe GST 2.0 could add around 0.2% to India’s GDP growth. That’s a big deal. It may also help reduce the side effects of high tariffs in other sectors.

This kind of reform sends a clear message — India wants to make doing business easier, especially for smaller players.

Ashok Leyland’s Position

Even though demand may rise with lower taxes, Ashok Leyland made it clear that they won’t increase vehicle prices to profit from the tax change. GST is collected and passed on to the government, so companies don’t keep it as income.

However, the company is hopeful that simpler rules and lower upfront costs will boost retail sales, especially in FY26.

Looking Ahead

If the government follows through and moves buses, trucks and small commercial vehicles from the 28% slab to 18%, it could be a major shift for the auto industry. Sales may rise, new buyers may enter the market and the overall system will become easier to follow.

For Ashok Leyland and the wider commercial vehicle sector, GST 2.0 could be the start of a new phase — one that’s cleaner, simpler and more supportive of growth.

Related News: 

☞ RTO-related issues will now have an easy solution: Government launches helpline number 149

☞ Delhi and Norway Discuss Joint Efforts on EV Policy and Adoption

---

Frequently Asked Questions on Commercial Vehicles

What is GST 2.0?

Ans: GST 2.0 refers to India’s proposed tax reform that will simplify GST slabs from four (5%, 12%, 18%, 28%) down to two (5% and 18%).

How could GST 2.0 affect commercial vehicles?

Ans: Reducing GST on commercial vehicles (CVs) from 28% to 18% could lower purchase costs and boost demand for buses, trucks and small commercial vehicles.

Who benefits most from the GST change?

Ans: Small fleet owners and first-time buyers benefit most, as the tax reduction makes CVs more affordable and simplifies the purchase process.

---

Join us for the latest updates on the Truck Industry -

☞  Facebook 

☞  Instagram

☞   YouTube

☞  Twitter

☞  LinkedIn

☞  Threads

Join Our WhatsApp Channel