The Indian government is planning to update the Goods and Services Tax for vehicles. The plan is to have only two tax rates for bike. If the proposal approved, it could mean a significant change in how much you are going to pay for your next bike.
The Proposed Change
Currently, all two-wheeler in India comes under a GST rate of 28%. However, for the bikes capacities above 350cc have to pay additionally 3% cess, bring the effective tax rates to 31%. The proposed reform is set to be change this system by a simplified two-slab GST system.
The Most significant changes for two-wheeler in two distinct categories:
18% GST for bikes under 350cc: This is a great development for the vast majority of Indian motorcycle buyers. if this proposal goes through, it will bring down the tax for the bike which are 350cc and under from current 28% to just 18%, making the bike more affordable. This will be a relief for the two-wheeler buyers.
40% GST for bike above 350cc: This is where biggest impact comes. The new proposal would place GST rate of 40% on bikes above 350cc. This significant jump in GST rates from the effective rate of 31% could make premium bikes more expensive.
Who will be Affected?
The proposed changes create two GST rates on engine size.
Bikes under 350cc: This category includes a wide range of popular bikes and scooters for companies like Hero, Tvs, Bajaj, Royal Enfield’s lineup, including the Hunter 350, Classic 350 and Meteor 350. Buyers of these bikes will pay according to the 18% GST rate.
Bike above 350cc: The new Slab will directly impact the brands which models with above 350cc. Brands like Ktm, Royal Enfield, Hero, Bajaj, Triumph, and other premium motorcycle manufacturers would see their price increase.
Why the Confusion?
The current discussion is a proposal not a final decision. these are potential rates not confirmed. The confusion arises after the government intention to simplify the tax structure for two-wheeler into two-tax slab, the new rate will create a drastic price difference in two-wheelers above and below 350cc.
Bikes that are likely to fall under the 18% GST slab (under 350cc)
There is a huge list, here are some popular bikes:
Royal Enfield:
- Classic 350
- Meteor 350
- Hunter 350
- Bullet 350
Honda:
- CB350
- CB300F
- All scooters (Activa, Dio, etc.)
- All bikes under 350cc (Shine, Unicorn, SP125)
Bajaj:
- Pulsar series (125, 150, 200, 220, etc.)
- Dominar 250
- KTM Duke 250
TVS:
- Apache RTR 160, RTR 200
- Ronin
- All scooters (Jupiter, Ntorq, etc.)
Hero:
- Splendor, Passion, HF Deluxe
- Xpulse 200
Jawa-Yezdi:
- All their models, as they are mostly 334cc.
Bikes that are likely to fall under the 40% GST slab (above 350cc)
Royal Enfield:
- Himalayan 450
- Interceptor 650
- Continental GT 650
- Shotgun 650
KTM:
- 390 Duke
- RC 390
- 390 Adventure
Triumph:
- Speed 400
- Scrambler 400 X
Harley-Davidson:
- X440
Hero:
- Mavrick 440