Stay informed about the new GST reforms on bikes and scooters, effective from September 22, 2025. Learn how these changes can affect two-wheeler affordability and impact your loan EMIs before making a purchase decision.
The New GST Impact on Bikes and scooters applicable from September 2025, introduces significant changes for the two-wheeler segment. Entry-level bikes and scooters now fall under a reduced tax bracket, enhancing affordability. Conversely, high-capacity performance bikes are placed in a higher tax slab, leading to a noticeable increase in their overall cost.
The revised GST framework introduces a restructured tax system for two-wheelers. The reform is designed to make commuter vehicles more accessible for middle-class buyers while maintaining balanced revenue generation. This change ensures affordability for daily users without compromising on fair taxation.
Under the new GST provisions, two-wheelers with engine capacities up to 350 cc are now placed in a lower tax bracket. This adjustment reduces their overall cost, making them more appealing to entry-level and commuter riders.
However, motorcycles with engines above 350 cc fall into a higher tax slab, leading to a moderate increase in prices for premium and performance-oriented models.
The updated GST structure has brought a clear shift in the two-wheeler market. Commuter bikes and scooters have become more cost-effective due to reduced taxation, directly benefiting everyday riders.
Meanwhile, premium and high-performance motorcycles now attract higher taxes, aligning affordability with functionality while applying greater levies to luxury and performance categories. Here are the details:
| Category | Previous GST Rate | New GST Rate (Sept 2025) |
|---|---|---|
| Bikes and Scooters up to 350 cc |
28% |
18% |
| Motorcycles Above 350 cc |
28% |
40% |
| Electric Two-wheelers (EVs) |
5% (concessional) |
5% (unchanged) |
The revised GST has reduced the tax rate on bikes with an engine capacity of up to 350 cc from 28% to 18%. This adjustment provides substantial relief to the entry-level and commuter segments, which account for a significant portion of the Indian two-wheeler market.
As a result, popular models in this category have become more affordable. With the GST rate lowered to 18%, the on-road cost of these bikes decreases, leading to reduced loan amounts and lower EMIs.
This change directly supports service workers, farmers, small traders, and daily wage earners by lowering expenses. It also enhances accessibility and is expected to drive higher sales in rural and semi-urban regions.
The GST Council has revised the tax framework for larger motorcycles, placing them under a higher tax bracket. Motorcycles with an engine capacity exceeding 350 cc will now attract 40% GST, compared to the earlier 28% - 31% range.
This adjustment is directed at premium and luxury two-wheelers, ensuring that high-end models contribute more significantly to the tax system. For buyers, this translates into higher on-road prices for brands such as Royal Enfield, Triumph, and other superbikes. The reform creates a clear distinction in the market.
The impact of GST on bikes marks a turning point for the two-wheeler market. With the revised tax structure, bikes have become more affordable, directly lowering costs for buyers. Prices of models from leading brands such as Bajaj, Triumph, and Royal Enfield are expected to reflect these changes.
For bikes up to 350 cc, the GST rate has been reduced from 28% to 18%. This sharp cut lowers the on-road price, resulting in smaller loan on bike amounts and reduced EMIs. Affordable bikes and scooters, commonly used by young riders, professionals, and rural households, will become more accessible.
In contrast, motorcycles above 350 cc are subject to a higher 40% GST, up from earlier levels. This adjustment raises the price of premium motorcycles, leading to larger loan requirements and higher EMIs. Entry-level buyers gain savings, while high-capacity bike enthusiasts face higher costs.
With the revised GST, entry-level and commuter bikes and scooters will become more affordable. Models like Honda Activa 125, Hero Splendor Plus, Bajaj Pulsar 150, TVS Apache RTR 160, and Yamaha FZ-S Fi are expected to see price reductions.
These vehicles benefit from the GST rate cut to 18%, offering direct savings and lower EMIs. Conversely, premium bikes in the higher engine capacity segment have become more expensive.
Popular models such as Royal Enfield Himalayan 450, KTM 390 series, Bajaj Dominar 400, Harley, and Triumph motorcycles are likely to cost more. With the 40% GST applicable, high-performance motorcycles will see a significant increase in on-road prices under the new regime.
The revised GST rates offer notable advantages for bike buyers, stimulating overall demand. Its impact includes:
Lower Costs: Reduced GST means you pay less for the two-wheeler you wish to purchase, improving affordability
Higher Demand: Lower taxes encourage more purchases, benefiting manufacturers and related industries such as tyres, batteries, and steel
Boost to MSMEs: Increased vehicle sales support MSMEs across the supply chain, generating a multiplier effect
Job Creation: The auto sector, already sustaining millions of jobs, is likely to expand hiring in sales, logistics, and dealerships
Support for the Informal Sector: Mechanics, drivers, and small garages may experience higher demand for their services
Easier Financing: Credit-driven purchases are expected to rise, supporting retail loan growth in semi-urban areas
The GST 2.0 revision on bikes directly influences their on-road prices, which in turn affect loan amounts and EMIs. Since most two-wheeler loans are calculated on the total vehicle cost, any change in GST immediately impacts repayment terms.
With GST on bikes up to 350 cc reduced to 18%, the on-road price decreases, lowering the required loan amount and reducing EMIs. This makes repayment more manageable and affordable.
Conversely, for bikes above 350 cc, the GST increase to 40% raises the purchase cost, leading to higher loan amounts and subsequently higher EMIs.
Reduced GST improves affordability, helping you qualify for loans even with lower incomes. Smaller loan amounts increase the likelihood of approval by banks and NBFCs. For premium bikes with higher GST, eligibility criteria may tighten as lenders reassess repayment capacity for larger loans.
With the revised GST rates effective from 22 September 2025, strategic timing of your purchase can yield savings. Bikes under 350 cc become more affordable, and financing options are likely to improve with easier eligibility and lower EMIs.
You can further simplify the purchase by opting for a two-wheeler loan on Bajaj Markets. Lenders on the platform offer up to 100% LTV and a flexible tenure of up to 72 months. Bike Loan Interest rates start at 0.99% p.a., ensuring lower EMIs and convenient repayment without paying the full amount upfront.
The new GST rate on bikes under 350 cc has been reduced to 18%, while bikes above 350 cc now fall under the higher 40% GST slab.
The new GST rates on vehicles will come into effect from 22nd September 2025. This rollout will affect the automobile industry, whether it is cars or two-wheelers.
Bikes with an engine capacity of up to 350 cc fall under the 18% GST category. This includes popular commuter and entry-level motorcycles from Hero, Honda, Bajaj, and Royal Enfield.
Yes, scooters are also included in the GST cut, as they fall under the two-wheeler category with engines up to 350 cc.
Yes, the GST reduction will not benefit premium bikes above 350 cc as the tax rate has increased to 40%. This means higher on-road prices, bigger loan amounts, and costlier EMIs.
A bike of ₹1.2 Lakhs could see a price drop of around ₹10,000–₹12,000, but actual savings may vary based on dealer pricing, location, and other charges.
The GST reduction does not apply to electric scooters. They will continue to attract a concessional 5% GST.
The new GST rate on bikes will lower the on-road price of bikes under 350cc, reducing the loan amount required and making EMIs more affordable.
Yes, dealerships are expected to pass on the GST benefit immediately as revised rates take effect from September 22.
You can calculate your revised EMI after the GST reduction using any standard online EMI calculator. Enter the updated bike price, loan amount, interest rate, and tenure to see the new EMI.