GST on 2-wheelers is whopping 28 percent putting them in the same bracket of ‘Luxury’ or ‘Sin’ goods. FADA has appealed for a reduction by 10 percent…
The Indian Government had devised different slabs for different type of products for taxation. While the commonly used products are kept in the lowest slab, rest of them fall in the higher brackets. There is a top of the line slab of 28 percent that is kept for ‘Sin’ Goods or ‘Luxury’ Goods. In short the Government intends to extract maximum amount of tax from products that are not a necessity and are generally bought for leisure, etc.
Some examples of products under this category are Tobacco, Carbonated or Caffeinated beverages, Cigarettes, Air conditioners, etc. All of this is okay but do you know that 2-wheelers of all capacities ie motorcycles and scooters that an average Indian rides to reach from point A to B are also kept in this category of ‘Luxury’ or ‘Sin’ Goods.
Yes, 2-wheelers attract the maximum 28 percent tax in India. In very simple terms, every Pulsar that you buy (assumed ex-showroom price Rs 96,000), the Government takes about Rs 21,000 as GST! And this does NOT include road tax, insurance and any other taxes that you and I pay while buying a motorcycle!
2-wheelers are the cheapest mode of transport for an average Indian considering the horrible public transport system at most places in our country. 2-wheelers account for over 70 percent total automobiles sales and a new one can be bought for as low as about Rs 60,000 onwards. This, then, poses the long-standing question – Why does the Government consider 2-wheelers as ‘Luxury’ or ‘Sin’? If it does not consider it either of them why are they taxed at the same rate as other ‘Luxury’ or ‘Sin’ goods?
Federation of Automobile Associations (FADA) has, yet again, appealed to the Indian Government to reconsider what is absurd and blatantly senseless. It has asked for a relaxation of 10 percent in taxes to catapult 2-wheeler sales that have witnessed a big blow because of a) these hefty taxes and b) numerous regulations that have been made mandatory in the last few years in quick succession.
The dealer’s body says that prices of 2-wheelers have gone absurdly high and this is preventing buyers from putting their money on the table. It has cited example of the following two wheelers –
- Activa’s priced has increased from Rs 52,000 in 2016 to Rs 88,000 in 2023.
- Pulsar, that used to cost Rs 72,000 in 2016 is now priced at 1,50,000
- Splendor has risen from Rs 46,000 to about Rs 75,000 in the same period, etc
So How BIG is Royal Enfield…?
FADA adds that 2-wheelers are the most fuel efficient and relatively environment friendly mode of transport. In fact, 2-wheelers constitute the basicmost need for an average Indian and the Government should push them instead of accumulating hefty taxes from them.
I believe the Government should seriously think about FADA’s appeal and correct the wrong it has been doing for the last many years…!
