Last updated on – 30 May, 2017

GST is one of the biggest reforms in India since Independence and finally it is going to roll out from 1st July 2017. According to the GST Council Meeting, GST council will impose a total 31 percent tax rate on motorcycles with engine capacity more than 350cc. 28 percent GST along with 3 percent additional cess, which makes it a total of 31 percent.

How GST will affect on Motorcycle

It is presumed that GST makes business easier, and doesn’t make the products or items cheaper. Nearly eleventy million taxes, a businessman or organization has to pay to the government. GST will replace several taxes such as state VAT, central excise, service tax and more, these taxes reduces the burden of businessman or taxpayer. The 3 percent additional cess on motorcycles greater than 350cc will impact bike manufacturers like KTM, with its 373cc engine, Royal Enfield, with its engines that displace more than 350cc. Luckily for Chennai-based bike manufacturer, the Classic 350 and Bullet 350, both the models have a good share of sales in the market.

The cost of ownership of motorcycle is likely to increase, due to the proposed 28 percent GST rate on spares and tax rate for services also goes up by 3 percent from (15 percent to 18 percent), that simply means labour charges will increase slightly if GST comes into force. One big exclusion is that the electric and hybrid vehicles which will tax under the slab of rate 12 percent. It will make electric vehicles expensive in specific areas where the government is forfeiting tax or providing discounts on purchasing electric vehicles.

It is assumed that the price of bikes or motorcycles will remain more or less same after the implementation of GST and two- wheeler industry must not worry about the future. However, GST will not affect bike or motorcycle manufacturer and the consumer because the tax rates are quite similar to the present taxation structure.

GST will affect Motorcycle Buyers

GST will affect Motorcycle Buyers

Here are the views of some company heads of Two-wheeler sector over GST Rollout:

Mr. Pawan Munjal, MD and CEO, Hero MotoCorp said, “It is indeed a historic day – a true manifestation of ‘Unity in Diversity’. At a time of divisive politics all around the world – particularly in the advanced democracies of the West – the passage of the Goods & Services Tax (GST) reflects the maturity and willingness of the Indian democratic system to work towards the greater benefit. All political parties have come together for the overall good of the country’s economy. This has the potential to make our economy more open and robust and our country more competitive internationally.”

Mr. YS Guleria, Senior VP, Sales and Marketing, Honda Motorcycle & Scooter India, “The Goods and Services Tax (GST) is definitely one of the most important tax reform in the history of India which was closely tracked by each and every one this monsoon session of Parliament. GST Council Meeting has finalized the GST rate and automobile industry falls under the 28% slab rate. The new simplified and uniform tax structure will reduce the cascading effect of tax-over-tax, provide a 360-degree ease of doing business for the complete automobile ecosystem, be it suppliers, manufacturers, dealers and most importantly customers who will get the benefit.”

Mr. Roy Kurian, VP, Sales and Marketing, Yamaha Motor India, said, “Introduction of GST is a significant step to promote trade and industries, especially for the manufacturing sector. The impact on the automotive sector can only be gauged after the RNR (revenue neutral rate) is announced. However, it is certain that the taxation system will get simplified and more transparent.”