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350cc-Plus Motorcycles Get Costlier: Now Taxed Like Alcohol And Tobacco
350cc-Plus Motorcycles Get Costlier: Now Taxed Like Alcohol And Tobacco - GST Hiked From 28% To...
The Goods and Services Tax (GST) Council has approved a sharp hike in taxes on high-capacity motorcycles. From September 22, all two-wheelers with engine capacity above 350cc will attract 40% GST, up from the existing 28%.
GST On 350cc-Plus Motorcycles: The Goods and Services Tax (GST) Council has approved a sharp hike in taxes on high-capacity motorcycles. From September 22, all two-wheelers with engine capacity above 350cc will attract 40% GST, up from the existing 28%. This is a big move for India's premium motorcycle segment. While small in volume, this category has been growing steadily as more buyers look for aspirational products. Brands like Royal Enfield, Triumph, KTM and Harley-Davidson dominate this space.
Higher On-Road Prices!
Until now, motorcycles above 350cc were taxed at 28% GST plus 3% cess, which made the effective rate 31%. With the new structure, such motorcycles are taxed flat 40%. This puts them in the same bracket as sin goods like alcohol and tobacco. Increased taxes mean higher on-road prices and reduced affordability.
Likely To Impact Royal Enfield
Royal Enfield, India's market leader in mid-size bikes, may see some impact from this development, as it has built a strong following for its above 350cc lineup that includes 650cc Interceptor, Continental GT, Super Meteor and the new 450cc Himalayan. Though most of its sales still come from its 350cc models, the 350cc plus motorcycles account for nearly 9% of domestic volumes.
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While the premium motorcycle market is small compared to the commuter bike category, it has been growing much faster than overall two-wheeler market. Industry data shows that the sales of over 350cc motorcycles have surged in recent years. In FY25, Royal Enfield alone sold over 1.4 lakh units above 350cc, marking 40% year-on-year growth. Bajaj Auto sold 1.55 lakh units, up 22% from last year.
Momentum May Take A Hit
Now, experts believe that the tax hike could slow this momentum in the short term. However, long-term impact may be limited, as premium motorcycle buyers are usually less sensitive to price increases compared with mass-market consumers.
Source: ZeeNews
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