GST impact on Bikes and Scooters

GST or Goods and Services Tax is only a couple of days from being brought into effect. It has in fact been a nail-biter as to what all commodities would be affected by it. The auto industry too has been anticipating price hikes and price cuts on two- and four-wheelers. While small cars are likely to carry price tags a bit bigger post-GST, price cuts on luxury cars and SUVs are being expected. Similarly, motorcycles too will be priced lower when the GST is put in place on midnight of 30th June or 1st July. However, motorcycles only with displacement under 350 cc will be eligible for this price cut. Multiple auto brands have been announcing discounts on their products even before the uniform tax is officially in effect. Several two-wheeler brands have extended pre-GST benefits to the customers. Now, the key question that arises is whether you should buy a two-wheeler right now and avail the pre-GST discounts or wait for the exact tax structure to be announced and a price revision thereafter. It will also have to be considered that while the price cuts will be more than welcome, there may be a rise in insurance prices, that may offset the price-cut that less than 350 cc bikes will witness.

We had a word with some executives at insurance companies, who expect a price hike in insurance documentation, which would eventually add to the vehicles’ cost and reduce the positive effect of GST if any.

The final rate of taxes and other terms are yet to be specified by the government, however, it is largely expected to bring down the overall tax on motorcycles from the current bracket of 28-35%. It should be noted that a total of 13 different taxes are applied on motorcycles currently.

Following are all motorcycles, prices of which have been lowered in lieu of GST. The brands in question are Bajaj, Royal Enfield, UM Motorcycles and TVS. These price cuts may be a result of the 2 percent rebate that was announced on the existing tax structure, which will bring the tax on motorcycles under 350cc down to 28% as opposed to the existing 30%.

Bajaj Auto was the first motorcycle brand to have announced GST benefits on its product lineup earlier this month. The company specified that the maximum discount would extend to Rs 4,500 and that the exact amount of discount on a motorcycle would depend on the model and the state of purchase.

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