The introduction of GST 2.0 is set to reshape the landscape of the two-wheeler market, potentially making popular models like the Honda Activa and Hero Splendor more affordable. This follows key decisions made during the 56th GST Council meeting.
The council has eliminated the 12% and 28% tax slabs, simplifying the tax structure. The majority of goods will now fall under either the 5% or 18% GST slab, with these changes taking effect from September 22, 2025.
Individuals planning to buy a new bike will be directly affected by these revised rates. Let’s delve into how these changes will impact the final prices.
Specifically, motorcycles with engines smaller than 350cc will experience a GST reduction, dropping from 28% to 18%. This shift is poised to benefit consumers looking to purchase models like the Bajaj Pulsar or the Honda Activa.
For bikes with engines exceeding 350cc, like Royal Enfield models, a 40% GST will be applicable. Previously, these bikes faced a combined tax of around 32% due to the 28% GST and a cess. The cess has been removed, leading to a flat 40% tax.
Looking at the Hero Splendor Plus as an example, the current ex-showroom price in Delhi is ₹79,426. A 10% reduction in GST could lower the price by ₹7,900, translating into savings for consumers. Beyond the ex-showroom price, other charges such as RTO fees, insurance premiums, and miscellaneous fees also contribute to the final on-road price. In Delhi, the on-road price of the Splendor Plus is approximately ₹93,715. The anticipated tax cuts could lead to significant cost reductions for prospective buyers.