GST on Bikes After GST 2.0: 18% up to 350cc, 40% Above 350cc

Updated: October 2026 · GST Folio

Under GST 2.0, recommended by the 56th GST Council meeting on 3 September 2025 and effective from 22 September 2025, two-wheelers are now taxed on the basis of engine capacity. Small bikes and scooters became cheaper, while big bikes became costlier.

🗣️ Saral bhasha mein samjhein

• 22 September 2025 se 350cc tak ki bike aur scooter par GST 28% se ghat kar 18% ho gaya hai, isliye ye saste hue.
• 350cc se badi bike par ab 40% GST lagta hai. Pehle 28% + 3% cess, yaani 31% tha, isliye ye mehngi hui.
• Electric two-wheeler par 5% GST hai (koi badlaav nahi). Cycle par GST 12% se ghat kar 5% ho gaya hai.
• Showroom price mein GST shaamil hota hai, isliye on-road price par seedha asar padta hai.
• Business ke liye kharidi gayi bike par aam taur par ITC nahi milta (Section 17(5)).

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Old vs New GST Rates on Two-Wheelers

What It Means for Buyers

• Up to 350 cc: Tax fell by 10 percentage points, so commuter bikes and scooters became noticeably cheaper on the ex-showroom price.
• Above 350 cc: The effective tax rose from 31% to 40%, making premium and large-capacity motorcycles costlier.
• Since the ex-showroom price includes GST, the change flows directly into the on-road price. Insurance and registration charges also depend on that price.

What It Means for Dealers and Businesses

• Invoices from 22 September 2025 must carry the new rate, based on the engine capacity of each model.
• Motorcycles purchased for business are generally blocked credits under Section 17(5). ITC is available only to dealers who resell them, or in other specified cases.
• Dealers must ensure the benefit of the rate cut is reflected in prices charged to customers.

For GST registration, return filing or advice on rate classification, call/WhatsApp +91 8051331315 or email gstfolio@zohomail.in.