Scooters, motorcycles under 150cc could soon get cheaper as govt considers GST reduction

Hero MotoCorp had urged the government last year that GST slab for two-wheelers below 150cc be brought down to 18 percent from the current 28 percent.

By:August 26, 2020 11:32 AM
TVS RadeonTVS Radeon (Image used representational purposes only)

During an industry interaction on Tuesday, Finance Minister Nirmala Sitharaman opined that two-wheelers are not luxury goods nor are they sin goods, and hence merit a GST rate revision. Two-wheelers currently attract 28 percent GST. According to a statement issued by CII, which was also issued by the finance ministry’s spokesperson, Sitharaman said a rate revision proposal would be taken up by the GST Council.

“Responding to a question about the need for lowering GST rates on two-wheelers, she assured that this was indeed a good suggestion as this category is neither a luxury nor a sin good and hence merits a rate revision,” the statement read.

This “will be taken up with the GST Council”, the statement quotes Sitharaman as saying.

Last year, the country’s largest two-wheeler maker Hero MotoCorp had urged the government to consider a phase-wise reduction in GST on the segment, starting with bringing bikes up to 150cc into the 18 percent slab.

AMRG & Associates Senior Partner Rajat Mohan said motorcycles, mopeds and cycles fitted with an auxiliary motor are taxed under the highest bracket under GST – 28 percent.

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“Two-wheeler which is a basic necessity for transportation of millions of medium-income group households in India is treated at par with sin goods like tobacco, cigars, revolvers, and pistols and luxury goods like racing cars, personal use aircraft, yachts, sports vessels, and rowing boats,” he said.

Goods and Services Tax or GST was officially introduced on 1st July 2017 in India. With GST applicable, the tax structure on motorcycles with engines under 350cc was relaxed down to 28 percent, which previously stood at 30 percent. However, two-wheelers with engines above 350cc are taxed at a higher percentage of 31 percent.

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