GST Rates for New Bikes
- Petrol/diesel two‑wheelers ≤ 350 cc: 28% GST
- Petrol/diesel > 350 cc: 28% + 3% cess = 31% GST total
- Electric two-wheelers: 5% GST (reduced from 12% to promote green mobility)
All new and used two-wheelers, including scooters and motorcycles, attract GST based on these categories.
GST on Related Services & Parts
- Two‑wheeler insurance: 18% GST applies to premiums
- Spare parts (e.g., brakes, brake pads, clutch cable): 28% GST
- Battery charging, consumables, lubricants: 18% GST
GST on Used Bikes
- Dealers (registered taxpayers) selling used vehicles must pay 18% GST on the margin (difference between selling and purchase price), effective from January 16, 2025.
- Sales between individuals (unregistered) are exempt.
Why These Rates?
- Higher GST (28–31%) on petrol/diesel bikes is treated as “luxury or sin” category.
- Reduced 5% rate on electric bikes is a green incentive from the government.
Input Tax Credit (ITC)
- Personal vehicles do not qualify for ITC.
- ITC is allowed if the vehicle is used:
- For resale (dealership business)
- In passenger transport (e.g., bike taxis)
- For rider training (driving schools)
Example: Cost Breakdown
- New petrol scooter (125 cc):
Ex-showroom ₹90,000 → GST @28% = ₹25,200 → Total ₹1,15,200 - Electric scooter (e‑scooter worth ₹100,000):
GST @5% = ₹5,000 → Total ₹1,05,000
Summary Table
| Item | GST Rate |
|---|---|
| Petrol/Diesel ≤ 350 cc | 28% |
| Petrol/Diesel > 350 cc | 31% (28% + 3% cess) |
| Electric two-wheelers | 5% |
| Two-wheeler insurance | 18% |
| Spare parts & consumables | 18–28% depending on part |
| Used vehicles (dealers/margin) | 18% |
Impact & Industry Response
- High GST on larger bikes has dampened demand; manufacturers like Hero, Bajaj, Honda are urging tax cuts.
- Lower GST on EVs boosts affordability and adoption of green transport.
Key Takeaways
- Buying a bike? Know the GST bracket; electric is far cheaper tax-wise.
- Buying used via dealer? Factor in 18% margin-based GST.
- Business owners? You may claim ITC if the vehicle is used commercially.
