Two-wheelers above 350cc, May Get Costlier as Govt Mulls 40% GST Slab
Two-wheelers above 350cc, May Get Costlier as Govt Mulls 40% GST Slab
Small bikes and scooters could get cheaper, but premium motorcycles face a sharp tax hike.
Superbikes and premium motorcycles may soon burn a bigger hole in the pocket, with the government considering a 40% GST on two-wheelers above 350cc. If approved at the upcoming GST Council meeting on September 3–4, the move could raise the price of a ₹2 lakh motorcycle by nearly ₹80,000.
Currently, motorcycles with 350cc engines and above attract 28% GST and 3% cess, taking the effective tax rate to 31%. Under the proposed structure, these would move into a new 40% slab, aligned with luxury and sin goods. In contrast, bikes below 350cc, which make up 97% of India’s two-wheeler market would see their GST rate cut from 28% to 18%. Scooters, all of which fall in this category, would also become cheaper.
The finance ministry has argued that the new slab structure will simplify taxation and reduce disputes in the automobile sector. “There will be just two slabs for automobiles — 18% for small cars and bikes below 350cc, and 40% for the rest,” an official said.
Industry watchers say the impact could be uneven. Royal Enfield, whose popular Classic, Meteor and Hunter models hover just under the 350cc mark, may benefit from the reduction. Rival brands such as Bajaj-Triumph, Harley-Hero and Honda, however, could face headwinds, as most of their models cross the 350cc threshold.
Premium motorcycles have been witnessing strong demand, growing 32% in FY25 to 1.72 lakh units. But anticipation of the tax hike has already led to a slowdown in purchases, according to industry executives. “Consumers are holding back, and this proposal, if cleared, will dampen sentiment in the premium bike segment,” one executive said.
The restructuring is part of the Centre’s wider plan to streamline GST into two main slabs — 5% and 18% — while levying a special 40% rate on luxury and sin goods. The final decision rests with the GST Council next month.
