Goods and Service Tax (GST), a unified taxation system is on verge of becoming a reality for Indian tax regime. As, it is going to be implemented soon, it would create a big impact for various sector of Indian economy like automobiles, pharmaceuticals, aviation, media and entertainment, telecom, FMCG and many others. The Automobile industry contributes for about 7% of Gross Domestic Product. Therefore, GST will significantly impact the automobile sector. This paper tries to explore the effect of GST draft model bill on automobile sector and specifically its tax rate effect on car prices for buyers. Various other concerns like valuation, job work and time of supply, incentives etc. need to be clearer to understand the true implications of GST. As per the proposed GST draft bill, luxury and high end cars would become comparatively cheaper with this new introduced tax rates and small car prices will remain unaffected. The hybrid cars will bear the brunt of new GST as their prices will go higher than the current prices under Excise and VAT regime.