SIAM Requests Government To Lower GST To 12-18% On 2-Wheelers

SIAM in its latest appeal has requested the government to ease out the GST tax slab rate on two-wheelers in the bracket of 12-18%, and while it looks like a bit too optimistic, there's a catch that makes all the difference. Are we finally up for cheaper bikes and scooters in the coming time? Read on to find out what the future looks like, but before that, if you are not a part of our 91Wheels WhatsApp Group, you are missing out on a lot of the latest automotive updates and discussions with your fellow petrolheads.

Also Read: Upcoming KTM 990 Adventure Rally Test Bikes Spotted - India Bound?

SIAM Presses For 12-18% GST On 2-Wheelers: Special Tax Slab For Flex-Fuel & CNG Models

The Society of Indian Automobile Manufacturers (SIAM) has appealed to the Government of India for a reduction in Goods and Services Tax (GST) rates applicable to two-wheelers. While this request isnt newsince it has been a recurring demand since the introduction of GSTSIAMs recent appeal adds an interesting twist. In addition to seeking a reduction to 18% (from the existing 28%) for conventional two-wheelers, SIAM also advocates for a further reduction to 12% specifically for flex fuels and CNG options.

SIAMs call for reduced GST rates aims to address critical industry challenges, including rural distress and the transition from BS-4 to BS-6 emission norms. By supporting this reduction, SIAM hopes to provide relief to the two-wheeler segment, which constitutes a significant portion of Indias total auto sales volume.

The body highlights that electric vehicle (EV) brands benefit from a significantly lower Goods and Services Tax (GST) rate of 5%. This favorable tax treatment contributes to reducing the on-road cost of electric scooters and bikes. However, the stark contrast between internal combustion engine (ICE) two-wheelers and EVs has adversely impacted sales. Despite reaching a record high of 21.8 million units in a single financial year before the COVID-19 pandemic, two-wheeler sales have not fully recovered. In 2023, sales figures stood at 17.07 million units.

Also Read- First-Ever Honda Electric Bike Launch This Year; India Launch Possible

What Is The Current GST Rate And The New Demands

Major motorcycle manufacturers, including Hero MotoCorp, TVS Motor, and Bajaj Auto, have advocated for an 18% reduction in GST for two-wheelers up to 125 cc, citing that nearly 90% of sales belong to this category. They argue that the current 28% GST rate is akin to what luxury items are taxed. However, the revised proposal calls for a universal 18% GST rate across all two-wheelers. Another proposal from SIAM seeks a 12% GST rate for flex-fuel vehicles, although this appears ambitious given that most two-wheeler brands, except for certain models from Bajaj and Honda, are already compatible with E20 fuel. While manufacturers have invested significantly to make their products adaptable to flex fuels, a 12% GST rate for such vehicles may not be feasible.

On the other hand, Bajaj Auto is advocating for a 12% GST rate on CNG vehicles, coinciding with its upcoming launch of the world's first production Bajaj CNG bike in India. This latest launch is slated to take place next month.

Image