GST is undoubtedly the most significant economic reform that modern India is going to witness. With the introduction of the GST (Goods and Service Tax) there would be a uniform tax structure in India. Coming to the automobile sector, the GST is sure to have an impact on car and bike prices in the country. Here we will talk specifically about the impact of GST on bike prices. Many buyers have the same question in minde – “Should I buy a bike before or after GST?” Many are not sure how will GST affect bike price. So in this post, we will explain you how GST will effect bike prices in India.
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GST Effect on Bike Prices
GST means having a more unified tax structure. Hence, bike manufacturers will be charging a uniform price across India. This means that the ex-showroom prices of bikes across the country will be the same. Yes, you read it right. The ex- showroom price of a bike across the nation would be the same. Once GST comes gets implemented on July 1, 2017, bikes will fall under the 28% GST slab. Apart from this, bikes with engines more than 350cc displacement will attract an additional 3% cess. So, for example, KTM’s RC390 and Duke 390 will have to take a hit from the additional 3% cess owing to their 373cc engines. While Royal Enfield bikes will be not have to bear this as they have an engine size of 346cc.
Now lets come to the question, would bikes will cost less after GST. Bikes would cost actually more or less the same as earlier. Under the present tax structure, many states levy additional taxes like Octroi. The introduction of GST will put an end to all such taxes. This would lead to marginal decrease in prices. Summarizing it in a sentence, the impact of GST on the prices of motorcycles will be really small as taxes paid after GST will be more or less similar to the total indirect taxes being paid at present.
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Now, lets come to the electric bikes. They will see a considerably higher price increase. The reason for this is, they will now come under the 12% GST slab. And they will no longer enjoy any sort of tax cuts or incentives. This is a major setback for manufacturers in India who have planed to invest big towards the introduction of electric two-wheelers.
Increase in Maintenance Costs after GST
Maintenance of bikes will become costlier after the introduction of GST. With GST there would be a 28% tax on spares. Also tax for services will go up by 3%. This result would be a higher labor charges and a higher cost of spares.
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Bikes to get cheaper after GST ? Answer : Yes, but negligible.
The entire country is in a state of confusion about how exactly the implementation of GST will effect the prices. GST will no doubt have its effect on all the goods and services in the country. However, we will stick to its effect on the price of bikes here. Many people still have the question, if bikes would become cheaper after GST. The answer is, the prices of the bikes would remain more or less the same. However, electric bikes would see a major increase in their prices.
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Despite this, there is already a rumor that bike prices will drastically fall after implementation of the GST. Many people have even postponed buying a bike because of this reason. Unfortunately this has led to sharp fall in sales of bikes. The bike manufacturers had to do something to counter this drop in sales. Hence, they have have started giving out lucrative discounts to counter this low demand. Bajaj Auto has started giving discounts of upto Rs 4,500 on their motorcycles. Other manufacturers are expected to follow the same. Hence, many motorcycles could get a price drop for in this month of June.
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Hope you found this article informative and you got your questions answered. Stay tuned to India Autoz (https://indiaautoz.in) for more news updates on the GST effect on bike price in India. Do leave your questions and your queries in the comments section below.