Planning to get your own two-wheeler? A sleek electric scooter for your daily travel or a good enough petrol bike for a weekend trip?You must have heard that the GST rates in India are about to change with new GST reforms. While not yet implemented, citizens across the country are hyped up about the new rates that will cut down prices of everyday goods and vehicles, increasing their affordability.
News reports suggest that its impact on two-wheelers is bigger than ever. From petrol bikes to electric scooters, major changes are coming in the prices. Keep reading this blog to know about it all in detail.
Current GST Rates on Two-Wheelers In India
Before we look into the aspects of GST 2.0 or ‘next generation GST’, let’s first understand what the current scenario looks like regarding two-wheelers.
For the majority of Indians, bikes are one of the most convenient means of travel, especially if you commute to work or even run basic errands. If you are living in a busy city, bikes might seem like a luxury due to the ease with which they help you get through traffic and small lanes.
However, petrol bikes and scooters with an engine capacity up to 350cc are taxed at a high GST rate of 28%. Bigger bikes with engines above 350cc are taxed a bit more, that is, 28% GST + an extra 3% cess, which makes it 31% in total.
In India, two-wheelers are considered the backbone of transport as they contribute to over 70% of the total vehicles used in this country.
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GST 2.0 and Bike Tax Cuts: What It Means for You
The four-tier GST system is expected to be simplified to a two-tier system, which automatically lowers the prices of everything from daily essentials to luxury items.
As per the new GST reforms, bikes under 350cc will undergo a tax slash from 28% to 18%. This means prices may drop up to 10% resulting in a big amount of savings after paying the product price.
For Example:
You buy a bike worth ₹90,000 from a brand such as TVS or Honda, which includes the current GST of 28%.
If the tax is reduced to 18% as per the GST update, the bike’s original price will remain the same, but the final price you pay will be much lower.
That is, the final price may be around ₹83,000. This means that instead of paying ₹90,000, you could save over ₹7,000 on your new two-wheeler.
Similarly, if the bike is worth ₹1.2 lakh, you could save more. Thus, first-time buyers and even students can now bring their dream of buying a bike to reality without much expenditure.
This change is expected to boost the two-wheeler market on the whole as sales increase with more and more customers buying bikes.
Electric Bikes prices after GST Reforms
Now, this is a very valid question and the answer might be even more surprising. The government has been a strong supporter of electric mobility and this is reflected in the current tax structure. The current GST on electric bikes is 5%, which makes them more accessible compared to petrol bikes.
However, if the GST rates on petrol bikes are cut to 18% as proposed, the price gap between them and electric bikes may reduce. To put it short, it will look like 18% for petrol bikes and 5% for electric bikes. This may result in a decline in the adoption of electric scooters in the short term, as petrol bikes may become more affordable.
Yet, it is to be noted that the long-term savings and ease of maintenance are likely to make electric scooters an attractive choice for many.
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GST Cuts After Diwali Best Time to Buy a Two-Wheeler
This largely depends on whether you are buying a two-wheeler for the first time, need an upgrade or are in urgent need of a bike or scooter. With the proposed GST cut that is set to be implemented before Diwali by the GST Council, logically, it would make sense if you waited till the changes were declared.
After the new GST rate comes into effect, you may notice major price drops in the scooter you planned to buy. For this reason, industry experts recommend that you wait till Diwali to access more affordable prices along with festive discount offers as GST 2.0 comes into effect.
However, if you are finding it really difficult to make your daily commute, waiting may be tedious. Especially when the new rates haven’t been implemented, nor the date decided.
At the end of the day, the wise choice is to wait a bit, as it brings greater benefits in the long term compared to the temporary relief.
Also Read: GST rates on automobiles
Owning Your New Two-Wheeler Still A Dream
Although the prices may come down with. the effect of GST reforms, buying a two-wheeler is a major financial decision and you need to plan your finances right. Although there are traditional loan options available, you don’t want to deal with the weight of EMIs, especially as Diwali nears.
At Buddy Loan, you can apply for personal loans with minimal documentation, compare lenders, check your credit score and calculate your EMIs all under one roof. Based on your financial profile, it connects you to suitable lenders, helps you access flexible repayment plans and low interest rates.
With the GST cut, the amount paid in EMIs may also reduce, considering you would need a small loan amount.
Conclusion
With GST reforms on its way, India may witness a new automotive era. The tax cuts on petrol bikes may make them more accessible for the vast majority, which can result in a spike in two-wheeler sales.
Whether you decide to buy a petrol bike or an electric scooter, shopping is about to get enjoyable as you may get to see lower prices, more savings and festive offers!
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