Increased GST Tax on Motorcycles with 350 cc Engine Capacity and Above: An Examination of the Price Impact on Royal Enfield, KTM, and Triumph Motorcycles
The Indian government has announced a revision of the Goods and Services Tax (GST) slabs across sectors, with a significant impact on motorcycles. The GST rate for two-wheelers above 350 cc has been increased from 28% to 40%, while vehicles between 350 and 500 cc were not taxed at the existing 28% rate.
The Finance Minister, Nirmala Sitharaman, made the announcement, stating that the change in taxation is aimed at addressing regulatory or fiscal policy objectives related to engine capacity and tax categorization. However, the increase in GST rates for motorcycles comes as a shock to many enthusiasts who have been waiting to enter the mid-capacity segment for years.
The 350-500 cc motorcycle segment in India is rapidly growing, with the Aprilia 457 family, upcoming BMW 450 platform, and KTM 490 twin-cylinder platform being examples. The revised GST slab will come into effect from September 22, and an additional 3% cess has been applied to two-wheelers above 350 cc, making the real hike 9%.
The speaker, expressing concern about the increased taxation on the 350-500 cc segment, suggests that a more balanced approach could have been taken. They propose that the 350-500 cc segment should have been taxed at the existing 28% GST rate, while bikes above 500 cc should have been taxed at 40%. They argue that such a structure could have promoted both domestic growth and local production of premium bikes by big manufacturers.
The revised GST rates are expected to impact domestic sales, particularly in the 350-500 cc segment. The speaker sympathizes with the shock felt by enthusiasts who have been waiting to enter this segment due to the revised GST rates. On a positive note, the GST slab for ICE two-wheelers under 350 cc has been reduced from 28% to 18%, which should help improve sales of motorcycles and scooters in India.
The speaker notes that it's great news that mid-capacity motorcycles will be exported from India, but expresses concern about the impact of the revised GST rates on domestic sales. The old and expected new prices for popular two-wheelers, such as the Royal Enfield Himalayan 450, Royal Enfield Interceptor 650, KTM 390 Duke, KTM 390 Adventure, KTM 390 Adventure X, Triumph Speed 400, Royal Enfield Conti GT 650, and Royal Enfield Guerilla 450, are listed in a table. The expected new prices for these popular two-wheelers after the GST increase are also provided in the table.
Despite the challenges, the speaker remains hopeful that the Indian motorcycle industry will adapt and continue to grow, fostering innovation and domestic production. The revised GST rates serve as a reminder of the ongoing efforts to balance fiscal policy objectives with the needs of various industries and consumer segments.
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