Motorcycles above 350cc will attract 31 percent tax under the new Goods and Service Tax (GST) slab for two-wheelers.
As per the GST Council, motorcycles including mopeds will attract 28 percent tax. The cess for motorcycles with engine capacity above 350cc is 3 percent, which makes it 31 percent, which will be effective from July 1, 2017.
However, the 28 percent GST on two-wheelers means that indirect tax rate will mostly remain the same as the current tax rate. The 3 percent cess on motorcycles with engine capacity above 350cc is expected to be marginal.
Mr Vinod Dasari, President, SIAM said, "The rates are as per the expectations of the industry, and almost all segments of the industry have benefitted by way of a reduced overall tax burden in varying degree."
He added, "This will pave the way for stimulating demand and strengthening the automotive market in the country, paving the way for meeting the vision laid down in the Automotive Mission Plan 2016-26."
While the cost to buy a motorcycle will remain more or less the same, the cost of ownership might marginally go up.
This is because of the proposed 28 percent GST on spares and possibility of an increase in tax rate of services to 18 percent from the current 15 percent.