GST On Two Wheelers

The implementation of GST has benefitted several sectors, including the two-wheeler industry. Goods and Service Tax (GST) on two-wheelers or bikes depends on the vehicle's engine capacity (eg, BS4 or BS6). It is applicable while selling new or used bikes as well. 

GST can be applicable on both electric as well as non-electric two-wheeler. In this page, we will discuss about the current GST on two wheelers and how it has impacted the two-wheeler industry. 

Current Bike GST Rates 2024

This is the current list of motorcycle GST rates in India:

Bike GST Rate

GST Rates 

GST on two-wheeler insurance

18%

GST for bikes with engine capacity of more than 350 cc

31%

GST for bikes with engine capacity of less than 350 cc

28%

Two-wheeler GST rate for brake pads, clutch cables, and gauge oil.

28%

GST on bikes Purchase

The GST rate on motorbikes is determined by the engine capacity of the two-wheeler. Currently, bikes under 350cc are subject to a 28% tax rate (base rate). However, if the engine size of the bike surpasses 350cc, a 3% compensatory cess is applied to the basic rate, ultimately resulting in a 31% tax rate.

GST Rates on Electric Bikes

The multiple advantages of electric bikes have entirely altered the two-wheeler industry. Because of the soaring petrol/fuel prices, many people are really considering purchasing an electric bike for daily commuting. Customers and manufacturers are both embracing the trend since electric vehicles are the way of the future. The previous GST rate for electric bikes was 12%. The new percentage has drastically reduced the cost of all-electric vehicles, including motorcycles and two-wheelers.

In order to encourage the purchase of electric bikes, the present electric bike GST rate is set at a low 5%. This GST basic rate is set to encourage the purchase and sale of electric two-wheelers, as people are shifting to these types of motorcycles due to their benefits and low maintenance costs. 

Impact of Two-Wheeler GST

A high GST rate on two-wheelers has reduced sales, resulting in huge losses for producers. Sales of two-wheelers have already declined dramatically in recent years. The increasing GST rate has also had an impact on premium bike insurance coverage. 

Purchasing a two-wheeler or any other type of vehicle is one of the most essential and costly financial decisions that a person takes in his or her life. The present GST rates on two-wheelers are 28% and 31%, respectively, which discourages individuals from investing in any type of two-wheeler. 

As a result, the industry's sales have plummeted dramatically. 

The government is presently considering lowering the GST on motorcycles in order to help two-wheeler manufacturers and reduce the financial strain on citizens. This will greatly benefit purchasers because there is a good likelihood that vehicle manufacturers will cut bike prices as a result of the lower GST rate. 

This will also provide manufacturers a chance to profit, allowing them to invest more and expand. Another thing that will happen is that the stock values of these companies will rise, as will investments. 

GST Number Addition to Bike Purchase

Entrepreneurs can apply for a GST number for their company. These entrepreneurs can claim GST returns since they are eligible taxpayers. Contact the insurer's customer service to amend the number on your 2-wheeler insurance policy to add a GST number to your bike.

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