Two-Wheelers May Get Cheaper This Diwali

Quick News Highlights:

• Government considering lowering GST on small-capacity two-wheelers from 28% to 18%

• Major manufacturers including Hero, Honda and Bajaj push for tax relief

• Festive season could bring added discounts and offers alongside tax benefits

The Indian government is reviewing the Goods and Services Tax (GST) structure, and two-wheelers may see a substantial reduction in tax rates ahead of Diwali. Right now, two-wheelers are taxed at 28% up to an engine capacity of 350cc, anything above that adds an extra 3% cess. For now, the government is reportedly looking to cut the 28% to 18% under new GST rules, benefitting bikes and scooters under 350cc.

Two-wheelers represent about 75% of India’s overall auto sales, and most of the sales come from affordable commuter bikes and scooters. Hence, the reported proposal of GST-cut should go a long way making a positive impact on both customers and consequently the industry.

Industry Voices Push For Lower Taxes

Manufacturers including Hero, Bajaj and Honda have urged the government to treat two-wheelers as essential goods rather than luxury items. Executives opine that these vehicles remain the primary mode of transport for millions, especially in rural and semi-urban India.

All the brands have also recently updated several models to meet the stricter BS6 OBD2B emission norms. Such emission and safety compliance in addition to inflation have made small-capacity two-wheelers quite expensive these days. Hero suggested an 18% GST rate for entry-level motorcycles up to 125cc, while SIAM (Society of Indian Automobile Manufacturers) has also backed the call for GST simplification.

Small Capacity Two-Wheeler Sales 

The importance of demand in small-capacity two-wheelers shows in terms of sales too. As per the SIAM sales data for June 2025, Hero sold over 3.1 million Splendor bikes, whereas Honda sold over 2.3 million Activa scooters.

According to SIAM, overall two-wheeler wholesales rose over 11% year-on-year in FY25 (April 2024 to March 2025). It’s clear that these affordable bikes and scooters take up the lion’s share in the overall two-wheeler sales, and reducing GST will make them even more popular. 

Festive Season Discounts And New Launches Go Hand-in-hand

With the festive season approaching, two-wheeler makers are expected to roll out additional offers, benefits and discounts to make them even more value for money. Any tax relief implemented alongside these festive promotions could further brighten prospects for the sector. Also, there’s a lot of interesting upcoming 125-160cc bikes and scooter launches in India to look forward to in the coming months, so lowering the GST will be crucial in making them even more affordable.