India’s Deepest Tax Cut Plan in Years to Spur Automobile Demand

India is looking to slash a local tax on small cars to 18% while levies on premium cars may be pared to 40%, people familiar with the matter said, as the Narendra Modi-led government seeks to bolster consumption demand.

Motorcycles of up to 350cc are also expected to be in the 18% goods and services tax, or GST, band but premium bikes will likely attract some version of a luxury tax, the people said, asking not to be identified as the discussions are private. Electric vehicles will continue to be taxed at 5%, they added.

The sweeping changes proposed ...