GST on Bikes and Two-Wheelers: The 350cc Line

The GST on bikes changed sharply on 22 September 2025. Under the GST 2.0 reform, most motorcycles and scooters dropped from 28% to 18%, the bigger bikes moved up to a new 40% rate, and electric two-wheelers stayed at 5%. The dividing line is the engine: 350cc. This guide explains the current bike GST rate for each category, why a Royal Enfield Classic 350 sits on the cheaper side of the line, how GST is folded into the ex-showroom price rather than the on-road price, and why a business buying a two-wheeler usually cannot claim the GST back.

GST on bikes: the current rates

The current structure for two-wheelers is short enough to fit in one table. It follows the slab structure set out in our guide to GST rate slabs in 2026: two main slabs of 5% and 18%, and a 40% de-merit rate for a narrow top slice of goods that used to sit at 28% plus cess.

When you buy from a dealer in your own state, the 18% shows on the invoice as 9% CGST plus 9% SGST; the 40% as 20% plus 20%. A bike bought from a dealer in another state carries the full rate as IGST. Either way the total is the same. Our explainer on CGST, SGST and IGST covers why the split exists.

What changed with GST 2.0

Before the reform, every petrol two-wheeler sat in the top 28% slab, the same bracket as large cars and air conditioners. Bikes above 350cc paid compensation cess as well, on top of the 28%. For the commuter motorcycles and scooters that make up most of the Indian market, 28% was the rate for eight years.

The 56th GST Council meeting moved most of the old 28% slab down to 18%, and commuter two-wheelers went with it. That is the new GST on bikes most buyers felt: a ten-point cut in the rate on anything up to 350cc. At the same time, compensation cess was wound down, and the goods that had paid 28% plus cess were moved to a single 40% rate instead. Bigger motorcycles fell into that group, so for them the change ran the other way.

A rate cut only reaches the buyer if the manufacturer and dealer pass it on in the price. Most makers announced revised price lists around the change, but the ex-showroom price on any given day is set by the maker, not by the GST notification. Compare the invoice, not the advertisement.

Where the 350cc line falls

The test is the engine capacity of the motorcycle. A bike with an engine of 350cc or less is on the 18% side; anything larger is on the 40% side. In practice this means:

• Commuter bikes and scooters (100cc to 125cc) — 18%. This is what most people searching for GST on bikes 125cc want to know: the rate fell from 28% to 18%.
• 150cc to 250cc sports and street bikes — 18%.
• Bikes with engines just under 350cc — 18%. The Royal Enfield Classic 350, with an engine of about 349cc, is the best-known example. Several other popular "350" models are also built on engines a little under the line.
• Bikes above 350cc — 40%. This takes in the 400cc to 450cc adventure and roadster segment as well as twin-cylinder and premium imported motorcycles.

Because the line is drawn on displacement, two bikes from the same showroom can sit in different brackets. If you are comparing a 350 with a 400 or 450, expect the gap in ex-showroom price to be wider than the gap in the base price, since one carries 18% and the other 40%. We do not quote model prices here: they change with every price revision, and the maker's site or the dealer's quotation is the place to check.

GST on electric scooters and bikes

Electric two-wheelers already had a low rate before the reform, and GST 2.0 left it alone. The GST on an electric scooter or electric motorcycle is 5%, regardless of motor power or battery size. A charger supplied with the vehicle is normally billed with it.

The cut on petrol bikes has narrowed the tax gap between petrol and electric. Before the reform, the difference was 28% against 5%; now it is 18% against 5%. Electric is still cheaper on tax, but less dramatically so, and any state-level road tax or registration concessions for electric vehicles are a separate matter set by each state.

How GST sits inside the on-road price

Most confusion about GST on a two-wheeler comes from mixing up the ex-showroom price and the on-road price. They are different things, and GST touches them differently:

Two practical points follow. First, you cannot work out the GST by applying 18% to the on-road price; it has to be backed out of the ex-showroom price. Second, a GST cut on the bike lowers the ex-showroom price, and in states where road tax is charged as a percentage of that price, the road tax comes down a little too. The premium on the mandatory motor policy is taxed separately; our guide to GST on insurance explains which policies carry GST after the reform.

A worked example in rupees

The figures below are illustrative only. They are round numbers chosen to show the arithmetic, not the price of any real model, and they assume the maker kept its base price unchanged and passed the rate change through in full.

On the commuter bike the buyer saves ₹10,000 on the ex-showroom price. On the larger bike, the 40% rate costs more than the old 28% plus the cess that applied, so the price goes up unless the maker absorbs part of it.

To find the GST inside a price you already have, divide by 1 plus the rate. An ex-showroom price of ₹1,18,000 at 18% gives a base of ₹1,18,000 ÷ 1.18 = ₹1,00,000, and GST of ₹18,000. Split for an intra-state sale, that is ₹9,000 CGST and ₹9,000 SGST. On an electric scooter at 5% with an illustrative ex-showroom price of ₹1,05,000, the base is ₹1,00,000 and the GST ₹5,000. For more on the arithmetic, see how to calculate GST.

Can a business claim ITC on a bike?

Usually not. Section 17(5)(a) of the CGST Act blocks input tax credit on motor vehicles used to transport persons with an approved seating capacity of 13 or fewer, including the driver. A motorcycle or scooter is a motor vehicle for carrying persons with one or two seats, so it falls inside the block. Using the bike for sales calls, collections or site visits does not change that. The credit stays blocked, and the GST becomes part of the cost of the vehicle.

Credit is available only where the bike itself is used for one of the three supplies the law carves out:

• Further supply of the vehicles — a two-wheeler dealer buying stock to sell.
• Transportation of passengers — a bike-taxi operator carrying riders for a fare.
• Imparting training on driving — a driving school's training bikes.

Businesses that run delivery fleets sometimes argue that a bike used only to carry goods should be treated like a goods vehicle, which is outside the block. That position is contested, and depends on how the vehicle is classified and used, so take advice before claiming credit on that basis. Insurance, servicing and repairs follow the vehicle: if the bike is blocked, so is the credit on them. The full rules, with examples, are in ITC on motor vehicles and the wider list in blocked credits under Section 17(5).

Checking the GST on your bike invoice

A dealer's tax invoice should show the dealer's GSTIN, the HSN code, the taxable value and the CGST and SGST (or IGST) separately. Check that the rate matches the bike's engine size: 18% up to 350cc, 40% above it, 5% for electric. If you are a business buying in volume, or you simply want to be sure the dealer is registered and filing, you can look up the GSTIN printed on the bill. Our guide on whether the GST on your bill is real walks through the checks, and gstinapi.com's GSTIN verification returns the registration status, legal name and filing status for any GSTIN.

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