GST Overhaul Set to Reshape Bike Prices: Relief for Smaller Bikes, Hefty Tax on Bigger Ones

A sweeping reform in India’s Goods and Services Tax (GST) structure is poised to usher in significant price shifts for two-wheelers. Under the proposed overhaul, motorcycles and scooters below 350 cc will enjoy a tax reduction from the current 28% to 18%, delivering welcome relief to the majority of budget-conscious buyers. In contrast, bikes with engine capacities of 350 cc and above, which include premium and high-performance models, will be subject to a substantially elevated 40% GST, a notable increase from the current effective rate of roughly 31%.

This reform forms part of a broader plan to simplify India’s complex GST framework, replacing the multi-tiered rate system with a streamlined two-slab approach: 5% for essentials, 18% for standard goods, and a special 40% levy for luxury and sin items, such as high-end automobiles and premium motorcycles. (A2ztaccorp, The Economic Times, The Financial Express, Reuters)

One clear implication is improved affordability for entry-level models, which dominate the Indian two-wheeler market; estimates suggest nearly 97% of domestic bike sales fall under the sub-350 cc category. Conversely, enthusiasts eyeing premium bikes—models like the Royal Enfield Classic, Meteor, Hunter, and Honda H’ness—could face significantly higher showroom prices if manufacturers pass on the added tax burden.