Impact of GST on 2-Wheeler Industry | 31 Percent Tax on Bikes above 350cc
GST will come into implementation from July 1, 2017. The day will mark changes in most tax structures and would help India unite under a single framework. This has led to hundreds of questions in the minds of automotive fans around the country.
Most are worried about their future plans as will their decided budget stay in place after July 1, 2017. What would be the effect of GST on a motorcycle buyer? This is undoubtedly the biggest question regarding the same and here is the right answer.
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According to the new set of taxes, the bikes which are under 350cc, will attract a tax rate of 28 percent instead of 30 percent under the old tax structure. For example, the 350 series Royal Enfield motorcycles are powered by a 346cc engine, which means that price for popular RE bikes like Classic 350, Bullet 350, and Thunderbird 350 will come down by around INR 3000 – INR 7000.
GST will make business easy as it will end all those smaller taxes and get those from one single place. However, according to GST, the bikes which are above 350cc will attract 3 percent additional cess. This will increase the price of motorcycles which are above 350cc, like Bajaj Dominar 400, KTM Duke 390, Royal Enfield Classic 500, and all bikes in India which have engine displacement of 350cc and above.
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After the implementation of GST, changes are also expected to happen on the service side. The tax rate on spares is proposed for 28 percent while tax for services will even get higher by 3 percent. This will result in a bigger labor charge in your final bill after servicing. The electric vehicles will also cost more as 12 percent tax will waive off the incentives on offer and thus, resulting in more prices than ever.
Actually, the prices will remain more or less the same while GST doesn’t look like a thing to be worried about in future. The introduction of GST won’t make a huge change in the prices considering that fact that the tax rates are more or less similar to the present total indirect tax rates. The minor change of 2-3 percent won’t make much of a difference to the buyers.
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