India, Aug. 18 -- In a significant policy shift aimed at supporting the middle class and revitalising the automobile sector, the central government has proposed a reduction in Goods and Services Tax (GST) on entry-level vehicles, including two-wheelers and small cars.

The proposal follows Prime Minister Narendra Modi's Independence Day announcement of a "Next Generation GST," which envisions a streamlined tax structure. As part of this reform, the government is considering replacing the current four-tier GST system with a simplified two-rate structure of 5 per cent and 18 per cent across all goods.

Currently, passenger vehicles are taxed at 28 per cent GST, in addition to a compensation cess ranging from 1 per cent to 22 per cent depend...