GST 2.0 – BOON OR BANE?

New tax rates have made many bikers happy but not all are enjoying it!

- WORDS RAVI CHANDNANI

Before September 22, 2025, a motorcycle, regardless of its engine capacity, was subject to a tax of approximately 31 percent (28 percent GST + 3 percent CESS), with the CESS varying between 3 and 5 percent.

At this rate, a customer ended up paying almost one-third of the motorcycle's purchase price in taxes. However, the new GST reforms introduced a tax rate of 18 percent for motorcycles with an engine capacity below 350cc and a rate of 40 percent for those exceeding 350cc.

Motorcycles with an engine capacity of less than 350cc benefited the most from this policy change, which encompasses a significant portion of the two-wheeler industry. While bikes above 350cc have become dearer due to the flat 40 percent tax rate. One positive aspect, however, is that the government has abolished the CESS.