India’s two-wheeler market, one of the largest in the world, is set for a big shake-up. The Finance Minister has announced a new GST structure that directly impacts motorcycles and scooters. Starting 22 September 2025, commuter bikes and scooters will benefit from lower taxes, while premium and luxury motorcycles will attract higher duties.
This shift comes as part of the government’s larger GST reform, aimed at simplifying the tax regime and boosting consumption. Here is a detailed look at what changes are coming, and how they will affect bike buyers.
The Broader GST Reform
India’s GST framework previously had four major slabs: 5%, 12%, 18%, and 28%, along with additional cess on luxury items. From 22 September 2025, these are being streamlined into just two primary rates 5% and 18%.
To balance revenue collection, a new 40% luxury/sin tax slab has also been introduced. This higher rate applies to premium consumer goods, certain luxury items, and now, high-end motorcycles.
GST on Motorcycles Below 350 cc
-
Old rate: 28%
-
New rate (effective 22 September 2025): 18%
This change covers nearly 98% of India’s two-wheeler market, which is dominated by scooters, mopeds, and commuter motorcycles. Buyers of models such as Hero Splendor, Honda Activa, Bajaj Pulsar, TVS Apache, and Royal Enfield Bullet 350 will benefit from lower ex-showroom prices.
Industry experts expect this to drive significant growth in demand during the festive season, when two-wheeler sales traditionally peak.
GST on Motorcycles Above 350 cc
-
Old rate: 28% (plus cess of up to 3%)
-
New rate (effective 22 September 2025): 40%
Motorcycles with larger engines will now fall under the luxury bracket. This includes brands like Royal Enfield (Interceptor 650, Himalayan 450, Continental GT), Jawa, Triumph, Harley-Davidson, and Kawasaki.
For buyers, this translates into a steep price hike. Analysts estimate that ex-showroom prices of popular models in this category could rise by ₹17,000-₹34,000, depending on the engine capacity and base cost.
Cheaper or Costlier After 22 September?
-
Cheaper: Commuter bikes, scooters, mopeds, and motorcycles with engine capacity of 350 cc or less.
-
Costlier: Premium motorcycles with engines above 350 cc, falling into the new 40% tax slab.
This policy is designed to encourage affordable mobility while treating premium motorcycles as luxury items.
Industry and Market Implications
-
Boost for commuter bikes: Lower GST is expected to bring down entry-level bike prices, spurring demand, especially in rural and semi-urban markets.
-
Pressure on premium bike segment: Brands that cater to enthusiasts and high-income buyers may see a slowdown, as higher taxes push prices beyond reach for many aspirants.
-
Festive season advantage: With the changes taking effect just before Navratri and Diwali, manufacturers of mass-market motorcycles are optimistic about sales growth.
-
Long-term outlook: While affordable two-wheelers gain, luxury bike sales could stabilize only if manufacturers absorb some of the additional tax burden.
Frequently Asked Questions (FAQs)
1. When do the new GST rates for bikes come into effect?
A. They will be applicable from 22 September 2025, the first day of Navratri.
2. Which bikes will become cheaper?
A. All motorcycles and scooters with engine capacity up to 350 cc, including most commuter and family two-wheelers.
3. Which bikes will get costlier?
A. Premium motorcycles with engine capacity above 350 cc, such as those made by Royal Enfield, Triumph, Harley-Davidson, and Kawasaki.
4. Will this affect electric vehicles (EVs)?
A. No. EVs continue to attract 5% GST, unchanged from earlier rates.
5. Why is the government doing this?
A. The reform simplifies GST, makes daily-use vehicles affordable, and ensures higher revenue collection from luxury goods.
Final Word
The 2025 GST revision is a double-edged sword for India’s motorcycle industry. On one hand, everyday commuters will benefit from lower taxes and reduced bike prices, potentially leading to record festive sales. On the other, premium motorcycle buyers will see a sharp increase in prices, which could slow demand for larger-capacity bikes.
Ultimately, this policy underscores the government’s focus on affordable mobility for the masses while treating high-end motorcycles as luxury products.
For More Information Click HERE
