As per multiple media report, the revised GST structure is likely to bring down the tax imposed on smaller capacity bikes to 18%, while the higher capacity ones will attract a higher GST rate.
According to a PTI report, the current norms in India mandate that automobiles attract a 28% GST rate along with a compensation cess charge, which ranges from 1% to 22%, depending on the type of vehicle.
A Uniform GST Rate?
Eicher Motors’ Chairman, Siddhartha Lal, highlighted how Indian two-wheeler brands dominate the small-capacity motorcycle segment worldwide. He also said that now the sector is making its way into the mid-capacity motorcycle segments.
“This is an urgent and heartfelt appeal to our respected policy makers and the public regarding the recent GST announcement,” Lal said in his post.
Siddhartha Lal explained that he expects lowering the GST for the sub-350cc category to help ‘broaden’ access, but increasing the rates for the higher capacity bikes will damage India’s edge in the global market.
“To sustain this momentum, a uniform GST of 18% across all two-wheelers is critical. Lowering GST for <350cc will help broaden access, but raising GST for >350cc would damage a segment vital to India’s global edge,” he said in his LinkedIn post.
Lal highlighted how a differential GST rate system will shrink India’s over 350cc category, choking the investment needed for India to compete in the global market.
“Raising GST on them would add negligible revenue but contract the segment. For Indian riders, these motorcycles are not luxury goods; they are efficient, affordable alternatives to cars, offering lower fuel use and maintenance – benefits that also help reduce India’s fuel imports,” he said in his post.
Lal cited the fact that in India, only around 1% of people own motorcycles above the 350 cc segment.
The Chairman also said that India leads the two-wheeler market segment compared to China, Japan, Europe and the United States, and potentially moving to a uniform GST regime will reinforce the strength of this leadership.
According to the official data, India currently holds a four-tier system for GST rates starting with 5%, then 12%, 18% and 28%.
