The new prices will be effective through the whole of June, but in case GST is deferred, the company said it would revert to the old prices till its rollout.
Mercedes Benz India locally produces nine models -- CLA sedan, SUVs GLA, GLC, GLE and GLS, luxury sedans C-Class, E- Class, S -Class and Maybach S 500 which are priced between Rs 32 lakh and Rs 1.87 crore (ex-showroom Delhi).
The price reduction will range from Rs 1.4 lakh on the CLA sedan to Rs 7 lakh on Maybach S 500.
Commenting on the decision, Mercedes-Benz India Managing Director and CEO Roland Folger told PTI: "It looks really reasonable now that the government will stick to its decision to implement GST from July 1."
He further said: "We now know more in details what taxations are going to be in various states. We have a clear picture of the road ahead.So we have decided to compensate the difference between the current and post GST prices for our entire Made in India range."
On an average, there will be a reduction of 4 per cent in the transaction prices for customers of all models produced in India, Folger added.
Price reduction varies by state between 2 per cent to 9 per cent and is dependent on current tax structure and local body taxes of states, the company said.
Folger, however, hastened to add that if for "any reason GST is not implemented by July 1, then we will revert to the old pricing till the time it is implemented".
"Our decision to go ahead and reduce the price is also a reflection of our confidence of this government," Folger added.
For the other models which are fully imported, Mercedes-Benz India is currently discussing about its pricing strategy under the GST regime.
"The impact on the prices on CBU vehicles is yet to be evaluated. We think the implementation of the GST structure is a landmark achievement for the Indian economy, which will support the ease of doing business in India," Folger said.
Under the GST rates announced last week, large luxury cars and SUVs with engine capacity of over 1,500 cc have been slated to attract a 15 per cent cess over and above peak rate of 28 per cent thereby bringing down the overall tax incidence compared to the present of around 50 per cent.