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 capacities 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 on-road prices of popular commuter and mid-range two-wheelers. 
 
If you're eyeing motorcycles with engine displacement under 350cc, like KTM's 160, 200, or 250 models, 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 is likely to make premium and performance bikes costlier than before. 
 
For example, something like the KTM’s 390 range, Royal Enfield’s 450 or 650 lineup and Triumph’s 400 offerings will now cost more from September 22 onwards. 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. 

Also Read: GST 2.0: Indian Auto Sector Welcomes New Tax Regime; Calls It A Boost For Buyers

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.