At a glance
- Biggest add-on
- Road tax (set by your state)
- Insurance on a new car
- 3-year third party + 1-year own damage
- Insurance on a new two-wheeler
- 5-year third party + 1-year own damage
- TCS
- 1% if the price is above ₹10 lakh
- GST
- Already inside the ex-showroom price
Source: IRDAI, Income Tax Department, GST Council
The price in a car advert is almost never what you pay. A car advertised at ₹10 lakh can need ₹11.5 lakh or more by the time you drive it home, and the gap depends on your state, your insurance choices and a few charges that dealers like to bundle in.
This guide walks through each line of a typical on-road quote, explains who sets it, and tells you which items are fixed by law and which ones you can push back on. Use it with the quote in your hand.
Key takeaways
- Ex-showroom price already includes GST. Do not let anyone add GST again on top.
- Road tax and registration are set by your state, not the dealer, and are usually the largest add-on.
- Insurance is compulsory, but you can buy it from any insurer, not only the one the dealer offers.
- Accessories, extended warranty and “handling” charges are optional or negotiable. Ask for each one in writing.
The parts of an on-road price
Most quotes in India follow the same layout. Here is what each line means.
| Line on the quote | Who sets it | Can you change it? |
|---|---|---|
| Ex-showroom price | Manufacturer (includes GST) | Only through discounts and offers |
| Road tax and registration (RTO) | Your state transport department | No, but it changes with the state where you register |
| Insurance | Insurer, under IRDAI rules | Yes, you can choose the insurer and add-ons |
| TCS (cars above ₹10 lakh) | Income-tax law | No, but you can claim it back |
| FASTag, number plates | Fixed or small charges | Mostly fixed |
| Accessories, extended warranty, handling | Dealer | Yes, all optional or negotiable |
Ex-showroom price and GST
The ex-showroom price is what the manufacturer lists. It includes the factory price, transport to the dealer, the dealer margin and GST. Since 22 September 2025, small petrol and CNG cars (under 4 metres, up to 1,200cc) and small diesel cars (under 4 metres, up to 1,500cc) carry 18% GST. Bigger cars and SUVs carry 40%, and the old compensation cess was folded in. Electric cars stay at 5%.
The point for you: GST is already inside this number. If a quote shows a separate GST line on the ex-showroom price, ask why.
Road tax and registration (RTO charges)
This is the line that surprises most buyers. Every state charges a one-time road tax when a new vehicle is registered, usually as a percentage of the ex-showroom price. The rate depends on the state, the price band, the fuel type and sometimes on whether the car is registered to a person or a company. Many states charge less, or nothing, for electric vehicles.
On top of road tax you pay a registration fee, the smart-card RC fee and a few smaller items. The dealer collects these and pays the RTO for you.
Ask the dealer for the exact road tax percentage they used and check it on your state transport department’s website or Parivahan. A wrong slab is one of the most common errors on a quote.
Insurance: what is compulsory and what is not
Under IRDAI rules, a new car must have third-party cover for three years and a new two-wheeler for five years. Own-damage cover, which pays for repairs to your own vehicle, is sold for one year at a time and renewed every year. Long-term own-damage policies were withdrawn from 1 August 2020.
The dealer will offer a policy, often with add-ons such as zero depreciation, engine protection and roadside assistance. These can be useful, but you are free to compare quotes online and buy from any insurer. Bring the policy to the dealer before delivery.
TCS on cars above ₹10 lakh
If the car costs more than ₹10 lakh, the dealer must collect 1% as Tax Collected at Source and deposit it against your PAN. This is not an extra tax. It shows up in your tax records and you can claim it back, or adjust it against your tax, when you file your income-tax return.
Charges you can question
- Accessories package: mats, seat covers, body kits. Optional. Buy only what you want, and compare prices outside.
- Extended warranty: useful for some cars, but it is optional and can usually be bought later within a set window.
- Handling, logistics or “PDI” charges: ask what they cover in writing. Transport to the dealer is already part of the ex-showroom price.
Do not sign a booking form that says “price at the time of delivery” without asking how often the maker has raised prices recently. Price hikes between booking and delivery are passed on to you.
How to check a quote before you pay
- Get it in writing Ask for a line-by-line quote for the exact variant, colour and city of registration.
- Check the ex-showroom price Match it with the price list on the manufacturer’s website.
- Verify road tax Check your state’s current slab for that price and fuel type.
- Compare insurance Get two or three quotes from other insurers for the same cover.
- Strike out what you do not want Remove optional accessories and packages before you pay the booking amount.
Questions buyers ask
Is GST charged on the on-road price?
GST is already part of the ex-showroom price. Road tax and registration are state levies and are not part of GST.
Can I buy car insurance outside the dealership?
Yes. The car needs valid insurance before registration, but you can buy it from any insurer and give the policy to the dealer.
Do I get the 1% TCS back?
Yes. TCS is credited against your PAN. You can claim it as a credit or refund when you file your income-tax return.
Why is the on-road price different in another city?
Road tax, registration charges and sometimes ex-showroom prices differ from state to state.
