Understanding Goods and Services Tax on Motorcycles in India: Updated Rates, Rules, and HSN Codes for 2025

The Goods and Services Tax (GST) system in India has streamlined indirect taxation across various sectors, including the automotive industry, specifically two-wheelers. The 56th GST Council meeting, held on September 3, 2025, in New Delhi, introduced significant rate revisions. These changes aim to make smaller bikes more affordable while imposing higher taxes on premium motorcycles. This article provides a detailed overview of GST applicability, exemptions, tax rates, and Input Tax Credit (ITC) for two-wheelers, incorporating the latest updates.

Key Updates The recent 56th GST Council meeting brought crucial changes, effective from September 22, 2025:

• Motorcycles with an engine capacity of 350cc or less: GST rate was reduced from 28% to 18%.
• Motorcycles with an engine capacity greater than 350cc: GST rate was increased from 28% to 40%. These changes became effective on September 22, 2025.

GST Applicability for Motorcycles

GST is levied on the sale of both new and used bikes or motorcycles in India. This applies to both electric and non-electric two-wheelers, although certain exemptions exist.

For the transportation of bikes valued over Rs. 50,000, an e-way bill must be generated. This requirement applies even if the consumer is not registered under GST. The place of supply for bikes or motorcycles is determined by the destination of the goods. Registered persons selling bikes are required to issue a tax invoice for each sale.

GST Rates and HSN Code for Bikes

The updated GST rates and Harmonized System of Nomenclature (HSN) codes for bikes, following the 56th GST Council meeting, are effective from September 22, 2025:

Input Tax Credit (ITC) on Bikes

Under Section 17(5)(a) of the CGST Act, generally, Input Tax Credit (ITC) cannot be claimed on bike purchases in India. However, there are specific exceptions where ITC is permissible:

• When bikes are acquired for passenger transportation or as part of public transport services.
• When bikes are purchased with the intent of further supply or resale.
• When bikes are used for providing training in driving such vehicles.

Impact of September 2025 Changes on Bike Prices

This section lists various bike models and the estimated GST impact resulting from the September 2025 rate revisions.

Bikes up to 350CC

For bikes with an engine capacity of 350cc or less, consumers can expect significant GST savings due to the reduced tax rate.

Bikes above 350CC

Bikes with an engine capacity exceeding 350cc will see an increase in price due to the higher GST rate.