<h1>Government proposes simplified two-tier GST rates on automobiles to reduce disputes and lower car taxes</h1> The government proposes restructuring GST rates on automobiles to resolve classification disputes related to engine capacity and vehicle size. Currently taxed at 28 percent plus a compensation cess of 1 to 22 percent, total tax on cars ranges from 29 to 50 percent. Under the new proposal, automobiles would fall under a simplified two-tier GST rate system of 5 and 18 percent, with a 40 percent slab reserved for a limited number of goods. This change aims to eliminate disputes, lower taxes on cars, increase affordability, and boost demand. The proposal will be reviewed by the Group of Ministers on GST rate rationalisation and subsequently by the GST Council for approval. The reform is part of a broader plan to replace the existing four-slab GST structure with fewer slabs to streamline taxation and promote consumption.