GST Hiked To 40% On Motorcycles Above 350cc

With the festive season in India just around the corner – a time when vehicle sales typically see a sharp rise – the government has announced a major update that could reshape the two-wheeler market. In a significant revision to the Goods and Services Tax (GST) structure, new tax rates have been introduced for two-wheelers, affecting both entry-level and premium segments, though in contrasting ways. 

 Also Read: GST Cut To 18%: Hatchbacks, Subcompact SUVs, Mass-Market Scooters And Bikes To Get Cheaper

For starters, motorcycles and scooters with engine capaciies up to 350cc are now more affordable, thanks to a cut in GST rate from 28 per cent to 18 per cent. This significant drop  is expected to bring down the ex-showroom and therefore on-road prices of popular commuter and mid-range two-wheelers. 
 
If you're eyeing motorcycles with engine under 350cc like KTM 160, 200, or 250, Royal Enfield’s 350cc range, or TVS’s entire range, this tax cut means potential savings. It could also boost sales in the budget segment, which is already the bread and butter of the Indian motorcycle market.  
 

Also Read: Two-Wheeler Sales August 2025: TVS, Royal Enfield, Suzuki Witness Growth; Bajaj Registers Dip In Domestic Sales

But it’s a different story for two-wheelers above the aforementioned displacement. Motorcycles above 350cc have been moved into a new GST slab of 40 per cent, up from the earlier effective rate of around 31 per cent (which included cess). This jump which is likely to make premium and performance bikes pricier than before. 
 
For example, something like the KTM’s 390 range, Royal Enfield’s 450cc or 650cc lineup and Triumph’s 400cc offerings, could now cost more. Even relatively affordable performance bikes, which were already walking the tightrope between value and luxury, are now likely to get dearer for many aspiring riders. 

The impact is expected to be most visible among entry-level premium buyers, where customers who were stretching their budgets to upgrade from a commuter to a premium two-wheeler.  

Moreover, the change could also affect the strategy of international brands trying to expand their footprint in India. Brands like Harley-Davidson, Triumph, and BMW, which have introduced more affordable models to attract Indian consumers, might face slower sales in this segment.