2-Wheelers in India Heavily Taxed; Rajiv Bajaj Compares With Brazil, Indonesia & Other Nations

Highest GST slab for motorcycles has been a point that Rajiv Bajaj has been raising for a long time. He compares taxes in other countries with India…

No matter how much we rejoice the recent growing numbers, it is a fact that our 2-wheelers have still not reached the pre-Covid buying levels – even after 2-3 years of the pandemic. The biggest reason for this is clearly the hefty price increment that we have seen over these years.

This is a clear sign that buyers, specially the entry level ones, have not been able to mop up enough money, or they have simply been fence-sitters during this time as we have never seen such steep price increments in such short terms, ever! Rajiv Bajaj, who has been pretty vocal on this front, has raised his voice again on this topic.

Rajiv, the MD of Bajaj Auto, highlights the fact that bikes during this period have become costlier by almost 35 percent on an average. He elaborates that it is good on the part of the government that it wants our citizens to ride safer bikes that emit lesser pollutants – the two reasons that have forced makers to jack up the prices.

But the problem is due to the increased tags, the common man has not been able to buy one! And if we are going gung-ho on one part, we should offer relaxation on other.

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Frankly, there has been no convincing answer to the question – Why are bikes in India taxed at the highest 28 percent GST slab which is reserved for luxury or sin goods. 2-wheelers are the most basic mode of transport in India and crores of Indians rely on it for their livelihood and transportation needs. A basic understanding states that they are neither ‘luxury’ nor ‘sin’!

gst slab for motorcycles
Broadly speaking, when you pay Rs 1 Lakh ex-showroom to the dealer, the original price of the motorcycle is just Rs 78000 – rest of it is taxes!

Rajiv Bajaj also went onto compare India-like economies to highlight their taxation on 2-wheelers. He says that the third biggest 2-wheeler market in the world after China and India is typically Brazil and 2-wheelers are taxed at only 9.25 percent there. Next biggest market, Indonesia levies only 11 percent taxes, Philippines has 12 percent taxation. In Malaysia and Vietnam, the taxes are just 10 percent; in Thailand they are just 7 percent.

He exclaimed..

So, very clearly, the aam aadmi in India is being made to pay, on an average, I would say, about 15 percent more in taxation terms that his counterpart in all of these economies which are very comparable to us.

Rajiv Bajaj also goes onto say that if India wants the two-wheeler industry to grow, if India wants to remain the powerhouse of 2-wheelers in the world and if we want employment to grow, we would need to relook at the GST structure.

Sensible taxation has been a point that has also been raised by other industry stalwarts but the Indian Government has failed to budge and neither has there been a convincing reply to the very basic question of – why the highest ‘Luxury/Sin’ tax slab for what is the most basic mode of transport for an average Indian!