GST Cut on Bikes: Indian Motorcycles Under 350cc Now 18% GST

India’s GST Council has enacted a game-changing tax reform for two-wheelers: motorcycles under 350 cc will now be taxed at 18% GST, down from 28%—effective September 22, 2025. This root-level adjustment, GST reduction on bikes, is set to boost affordability and invigorate demand across the commuter bike segment.

Engine Capacity & Pricing Impact

The downward GST shift applies to the vast majority of bikes—commuter motorcycles and scooters below 350 cc such as Hero Splendor, Honda Activa, Bajaj Pulsar, and TVS Apache—making these models notably more affordable. Industry experts anticipate a significant surge in festive-season buying for entry-level models.

Conversely, premium or large-capacity motorcycles over 350 cc will now be taxed at a steep 40% GST, up from an effective rate near 31% (i.e., 28% GST plus cess). This adjustment targets aspirational segments—including Royal Enfield’s 650 cc twins, KTM, Triumph, Harley-Davidson models—raising their on-road prices and potentially dampening demand.

Market Repercussions & Segment Shift

This structural shift in GST policy will likely widen the gap between mass-market and premium bike segments. Lower-taxed, fuel-efficient commuter models stand to benefit from stronger price competition and higher sales. For premium bikes, demand sensitivity to taxes may result in slowed sales momentum, despite their aspirational appeal.

According to analysts, while the premium segment accounts for a small market share (approximately 1%), the GST hike could erode growth in a category that has increasingly catered to urban professionals and younger riders. Meanwhile, the more accessible GST rate for commuter bikes is expected to drive volume.

Regulatory Clarity & Implementation Timeline

The new tax structure is part of broader GST reforms, which reduce slabs to 5%, 18%, and a special 40% for luxury items, effective from September 22, 2025. This reform simplifies tax structure and aligns incentives toward affordable, environmentally conscious mobility.

Conclusion
The GST reduction on bikes under 350 cc to 18% marks a decisive shift toward more affordable mobility for everyday riders. It better positions commuter motorcycles and scooters for higher demand, especially during the festive season. However, the simultaneous 40% tax on premium bikes over 350 cc poses a noticeable deterrent for higher-capacity models.

This reform clearly favors the value-conscious buyer who prioritizes practicality, while making the premium enthusiast segment weigh the added cost against aspirational appeal. In short: for efficient daily commuting, the new GST structure brings welcome relief—but for big-bike fans, it's time to reassess budgets or timing.