The GST Council has lowered the Goods and Services Tax (GST) on motorcycles up to 350 cc from 28% to 18%, effective September 22, 2025, marking a major relief for everyday riders and commuters
What’s Changing?
- The GST on two-wheelers with engine capacities up to 350 cc is now 18%, down from the previous 28%
- This change will cover the vast majority (around 98%) of the Indian motorcycle and scooter market
- Meanwhile, motorcycles exceeding 350 cc have been moved to the 40% GST slab, classifying them under “sin and luxury goods”
- The new GST structure applies starting September 22, 2025, right before the festive season
Why This Matters
For Consumers and Everyday Riders:
Popular commuter and mid-size motorcycles—such as the Hero Splendor, Honda Shine, TVS Apache, and Royal Enfield Classic 350—will now become more affordable, with savings potentially reaching ₹10,000 on a ₹1 lakh bike
For Premium Segment Buyers:
Prices for bikes above 350 cc, like the Royal Enfield Himalayan 450 or KTM 390, may increase under the new tax structure
For the Two-Wheeler Industry:
Royal Enfield’s Managing Director, Siddhartha Lal, has appealed for a uniform 18% GST across all motorcycles, warning that a split slab system could contract the higher-capacity segment and threaten India’s global leadership in two-wheeler manufacturing India Today
Broader Economic Impact
This reform is part of a larger overhaul of the GST framework, consolidating slabs from four down to two—5% and 18%, with a special 40% rate for luxury goods. The aim is to boost domestic demand, simplify the tax regime, and align with policy goals such as inflation control and increased compliance
Fast Facts: GST on Motorcycles
| Segment | GST Rate (New) | GST Rate (Old) | Impact |
|---|---|---|---|
| Motorcycles up to 350 cc | 18% | 28% | Cheaper, accessible to mass-market buyers |
| Motorcycles above 350 cc | 40% | 28% + cess | More expensive, considered luxury segment |
| Effective Date | Sept 22, 2025 | — | Just in time for festive sales boost |
| Industry Reaction | Mixed | — | Commuter segment gains, premium segment faces pressure |
