GST on Bikes – Tax Rates Based on Engine Capacity

The Suzuki Hayabusa was sleek, fast, and famous, and ever since he first saw it roar past him, Mohan had dreamed of having one. Finally, one sunny Saturday, he found himself standing in front of the shop, staring at the price tag: ₹16.90 lakhs. His heart was racing.

But then came the twist.

"Sir, with 28% GST and 3% cess, the on-road price jumps to ₹21.39 lakhs," the salesman said casually.

"Wait, what?!" Mohan blinked.

Yes, ₹4.49 lakhs just in GST and cess. That was more than the price of a brand-new commuter bike.

He laughed, half in awe, half in shock. "So the Hayabusa doesn't just fly on the road—it flies through taxes too."

He still bought it. Dreams don’t calculate taxes.

What Is GST and How Does It Apply to Two-Wheelers?

Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services in India. Introduced on July 1, 2017, GST replaced multiple cascading taxes, streamlining the taxation system. For two-wheelers, the applicable GST rate varies based on engine capacity and fuel type.

GST Rates for Two-Wheelers:

As per the GST Council's recommendations:

Non-electric two-wheelers with engine capacity up to 350cc: 28% GST.

Non-electric two-wheelers with engine capacity exceeding 350cc: 31% GST (28% base rate + 3% cess).

Electric two-wheelers: 5% GST.

These rates apply to both new and used bikes. Additionally, the transportation of bikes valued over ₹50,000 requires the generation of an e-way bill, even for consumers not registered under the GST.

Example:

Consider the purchase of a Honda Unicorn (engine capacity: 160cc) with an ex-showroom price of ₹1,00,000.

GST at 28%: ₹1,00,000 × 28% = ₹28,000

On-road price: ₹1,00,000 + ₹28,000 = ₹1,28,000

For a Royal Enfield Classic 350 (engine capacity: 349cc):

GST at 31%: ₹1,50,000 × 31% = ₹46,500

On-road price: ₹1,50,000 + ₹46,500 = ₹1,96,500

This demonstrates how GST impacts the final cost based on engine capacity.

GST Rates for Bikes: Petrol, Diesel, and Electric Compared

In India, the Goods and Services Tax (GST) on two-wheelers varies based on engine capacity and fuel type. Understanding these rates is crucial for prospective buyers to gauge the tax implications of their purchases.

Petrol & Diesel Two-Wheelers

Engine Capacity ≤ 350cc: 28% GST

Engine Capacity > 350cc: 31% GST (28% base rate + 3% cess)

Example: For a bike priced at ₹1,50,000 with a 350cc engine:

GST: ₹1,50,000 × 28% = ₹42,000

Total Price: ₹1,50,000 + ₹42,000 = ₹1,92,000

For a bike priced at ₹2,00,000 with a 400cc engine:

GST: ₹2,00,000 × 31% = ₹62,000

Total Price: ₹2,00,000 + ₹62,000 = ₹2,62,000

How Does GST Affect the Final On-Road Price of Bikes?
 

Notes:

GST is calculated on the ex-showroom price.

Other costs include state road tax, registration fees, and insurance, which vary slightly by state.

Electric vehicles benefit from a reduced GST rate (5%) to promote green mobility.

GST on Bike Accessories and Spare Parts

Example: Replacing a clutch cable priced at ₹500.

GST at 28%: ₹500 × 28% = ₹140

Total Cost: ₹500 + ₹140 = ₹640

These GST rates are applicable across India. However, the final price may vary slightly due to additional charges like labour fees or regional taxes.

Electric Bikes: A GST Advantage?

Yes, electric bikes in India benefit from a significant GST advantage. The Goods and Services Tax (GST) on electric two-wheelers is set at a reduced rate of 5%, compared to the higher rates applied to petrol and diesel bikes. This reduction aims to promote eco-friendly transportation options and make electric vehicles more affordable for consumers.

Example: Purchasing an electric two-wheeler priced at ₹1,00,000 (ex-showroom).

GST at 5%: ₹1,00,000 × 5% = ₹5,000

Total Price: ₹1,00,000 + ₹5,000 = ₹1,05,000

This demonstrates how the reduced GST rate directly lowers the upfront cost of electric two-wheelers, making them more accessible to consumers.

In addition to the GST reduction, the Indian government offers other incentives to encourage the adoption of electric vehicles:

Income Tax Deduction: Up to ₹1.5 lakh on the interest paid for loans to purchase electric vehicles under Section 80EEB of the Income Tax Act.

FAME II Scheme: Subsidies for electric vehicles, including two-wheelers, to reduce the upfront cost.

These combined benefits make electric two-wheelers an attractive option for consumers looking to reduce their carbon footprint and benefit from financial incentives.

Can You Claim an Input Tax Credit (ITC) on Bike Purchases?

Conclusion

Although GST has simplified bike prices in India, it still has a big effect on the whole cost, particularly for more expensive models. Knowing the GST rates helps consumers to make properly informed decisions, particularly when comparing electric and fuel options.

FAQS

Q. What is the GST rate on petrol bikes?

28% (plus 3% cess if engine capacity > 350cc).

Q. What is the GST rate on electric bikes?

It’s per cent.

Q. Is GST applicable on bike accessories?

Yes, usually at 18% or 28%, depending on the item.

Q. Can I claim GST Input Tax Credit on a bike purchase?

Only if used for eligible business purposes like resale or transport services.

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