India’s Goods and Services Tax (GST) regime has undergone a significant overhaul in September 2025. In a major announcement, Finance Minister Nirmala Sitharaman introduced a new GST framework that simplifies tax slabs and revises rates for several industries, including automobiles. The revised rates will be implemented from 22 September 2025, right before the festive season, and are expected to influence motorcycle pricing across segments.
The move aims to encourage affordability for mass-market vehicles while levying higher taxes on luxury goods and high-performance models. Let’s break down what these changes mean for motorcycle buyers in India.
GST Overhaul: Key Changes at a Glance
The GST Council approved sweeping reforms to simplify India’s taxation structure. Under this restructuring:
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Essential goods and services will now attract 5% GST or be tax-free in some cases.
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Standard goods and most consumer products will attract 18% GST.
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A new 40% “sin tax” category has been introduced for luxury items and de-merit goods, including large cars, premium motorcycles, yachts, and certain beverages.
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Electric vehicles (EVs) remain taxed at 5% GST, with no change in rates.
This simplification replaces the previous complex slab structure, aiming to boost consumption while taxing luxury products at higher rates.
Summary Table
Category |
Engine Capacity |
Old GST (incl. cess) |
New GST Slab |
Effective Date |
|---|---|---|---|---|
Commuter & budget motorcycles |
≤ 350 cc |
~28% |
18% |
22 Sep 2025 |
Premium motorcycles |
> 350 cc |
~31% |
40% |
22 Sep 2025 |
Official Source: Press Information Bureau – Government of India
Motorcycles Up to 350cc: A Tax Relief
The most notable update is for motorcycles with engine capacities up to 350cc. These models will now attract 18% GST, a reduction from the earlier 28% rate. This is a significant step for the Indian two-wheeler industry, as motorcycles under 350cc make up nearly 98% of the market share.
This reduction is expected to make popular commuter and entry-level motorcycles, such as the Hero Splendor, Honda Shine, Bajaj Platina, and the Royal Enfield Bullet 350, more affordable.
Motorcycles Above 350cc: Higher Taxes
While smaller bikes enjoy relief, motorcycles with engines above 350cc are now taxed at a flat 40% GST rate. This is a steep increase compared to the earlier taxation system, which included 28% GST plus up to 3% cess, resulting in an effective tax rate of about 31%.
This change brings big bikes into the same tax bracket as luxury goods, alcohol, and tobacco, reflecting the government’s intent to position these as high-end, discretionary purchases.
Market Impact: Winners and Losers
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Winners:
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Commuter and budget motorcycles under 350cc will see a drop in prices.
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The two-wheeler market, dominated by budget bikes, is likely to see a boost in sales, benefiting brands like Hero, Bajaj, TVS, and Honda.
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Losers:
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Buyers of mid-capacity and premium motorcycles (e.g., KTM 390 series, Royal Enfield 650 twins, Triumph 400 range) will face higher prices.
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Performance and touring enthusiasts may delay or reconsider purchases due to increased taxation.
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Example Price Revisions for Popular Models
Motorcycle Model |
Previous Ex-Showroom Price (Approx) |
New Price After GST (Approx) |
Estimated Increase |
|---|---|---|---|
Bajaj Pulsar NS400Z |
₹1.92 lakh |
₹2.05 lakh |
+₹13,000 |
KTM 390 Duke |
₹2.97 lakh |
₹3.18 lakh |
+₹20,000 |
KTM 390 Adventure X |
₹3.03 lakh |
₹3.25 lakh |
+₹21,000 |
Triumph Speed 400 |
₹2.50 lakh |
₹2.68 lakh |
+₹17,000 |
Royal Enfield Interceptor 650 |
₹3.09-₹3.38 lakh |
₹3.30–₹3.62 lakh |
+₹21,000-₹24,000 |
Royal Enfield Himalayan 450 |
₹2.85-₹2.98 lakh |
₹3.05–₹3.18 lakh |
+₹20,000 |
Frequently Asked Questions (FAQs)
1. When will the new GST rates apply?
A. The new rates come into effect on 22 September 2025.
2. Which motorcycles will become cheaper?
A. All bikes with engine capacities ≤350cc will see a price drop due to the reduced 18% GST rate.
3. Why are motorcycles above 350cc taxed at 40%?
A. The government categorizes them as luxury or de-merit goods, similar to large SUVs, yachts, and premium imports.
4. Are electric motorcycles affected?
A. No. EVs continue to be taxed at 5% GST, unchanged under this reform.
5. What about cars?
A. Small cars with petrol engines up to 1.2L and diesel up to 1.5L also benefit from a reduced 18% GST rate.
Conclusion
The GST overhaul marks a landmark shift in India’s tax policy, simplifying rates and aligning taxation with affordability goals. Buyers of entry-level and commuter motorcycles will see prices drop, making two-wheelers more accessible. However, premium motorcycles now attract a 40% GST rate, making them more expensive.
For consumers planning a purchase, the period after September 22, 2025, will be key to evaluating price changes and adjusting buying decisions accordingly.
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