The Finance Minister’s Announcement
The finance minister announced big changes in the GST rates, which will have significant impacts on various sectors. In this video, we are going to focus on the two-heer industry. For Indian bikers, there is good news and bad news. But we will start this video on a positive note.
Good News: Major GST Cut for Most Bikes
The big news is that GST rates for two-wheelers have been slashed from 28% to 18% for motorcycles and scooters under 350cc. For many years, manufacturers have been requesting the government to reduce the tax rate to 18% for two-wheelers under 125cc. But the government has taken one step higher and reduced taxes up to 350cc.
Now this policy will have a huge impact because 98% of the two-wheelers sold fall under this bracket, and we can see the two-wheeler industry witnessing a massive bump in terms of sales. In fact, we think that during this festive season, we could see record sales happening because the sentiments of buyers will improve, and we hope that the sales come back to the previous levels because the industry has been suffering.
So, as you can see, this could have a very big impact on the two-hear industry. And these are the changes in pricing for the popular two-wheelers on your list.
Bad News: Steep GST Hike for Larger Bikes
However, on the flip side, GST has been increased from 28% to 40% for two-wheelers above 350 cc, which we think is very steep. I would like to remind our viewers that the GST rate wasn’t 28% because there was a 3% cess added.
So on paper it might look like a 12% hike, but in reality that’s a 9% hike. Still, overall this is a big jump in terms of tax structure for motorcycles about 350cc and this could affect sales in this industry and if you’re planning to buy a KTM 390 Duke a Royal Enfield Himalayan 450 or the 650 twins or even the Triumph 400 family or a big motorcycle you will have to rework your finances because the impact on the pricing will be on the higher side.
A Case for a Separate Mid-Capacity Tax Slab
Personally, I think the tax structure should have been different. Maybe for 350 to 500 cc motorcycles, the current tax structure of 28% should have been maintained because India is emerging as the hub for sub-500 cc motorcycles.
The mid-capacity motorcycle segment is witnessing a lot of action, and a lot of brands are investing in India. Arilia has the 457 family over here. BMW will be getting the 450 platform in India. KTM is already developing the twin-cylinder 490 platform. So you can see there is a lot of action happening in this uh segment, and also for the Indian bikers who have aspirations of getting up into the mid-capacity displacement, this comes as a crude shock.
So while India will continue to manufacture mid-capacity motorcycles and will be exporting, when it comes to domestic sales, the hike in GST rate would impact the sales, and this is what we think will be the price revision for popular motorcycles in the 350 cc and above category.
Overall Impact on the Industry
So overall, this is good news for the two-heer industry because 98% of the market falls under this new tax structure. This will help revive sales. This will be good news for the two-hear industry. Not only the manufacturers but also the ancillaries, and this will help get the sales momentum going, which has been a bit slacking over the past few years.
Having said that, we think the 350 to 500 cc category should have had a separate tax slab because, again, as aspirations for enthusiasts, this is a segment that they were looking forward to in terms of upgrading their two-wheelers. So a lot of bikers might have to, you know, uh, postpone their purchase, or you know, rework their finances, which will have an impact on their wallet. So overall, this is positive news for the entire industry because of the reduction in the GST charge, not only for manufacturers but also for ancillary manufacturers. This comes as good news.
Having said that, as I mentioned before, for enthusiasts, this doesn’t come as good news because the 40% GST uh tax lab is very expensive, which will kind of, you know, they’ll have to postpone their purchase or rework their finances. So yes, it is good and bad, but overall, this is very good news for the entire two-wheeler industry.
Personal Concerns and Final Thoughts
Having said that, there are two concerns for me on a personal level. We’ll have to wait and watch whether or not the manufacturers will pass on the entire benefit to the consumers, or they will rework the exorbitant pricing of their products.
The second aspect is that this GST is coming from the centre, but on the state level, the state government might see this as an opportunity to increase the road tax, you know, because they can get more revenue. As you can see, there is still some confusion. We’ll get more clarity on this on September 22nd when the new GST slab comes into effect. But overall, I think this is a great move by the government, and this should help the two-wheeler industry improve its sales.
Your Opinion
So, what’s your take on the new GST slab from the government? Do you agree or not with me on the 350 to 500 cc tax slab? And what’s your take on the overall, uh, GST implications in the industry? Do let us know in the comments.
And if you have any queries, please write to us in the comment section, and we will try to answer you. As always, thank you for watching. Ride safe and stay safe.
