GST impact on two-wheelers: Is your ride less expensive now?

Looking to buying a bike but confused about what the new Goods and Services Tax (GST) means for you?

Here is a quick low down on all you need to know to make the best choice for yourself.

GST promises to simplify transactions in the two-wheeler sector. For the purposes of GST, two wheelers have been divided into two categories - those with engine capacity below 350cc, and those above 350cc.

Under the GST regime, two-wheelers below 350cc are set to become cheaper. Earlier, such two-wheelers were taxed at 30 per cent and included a wide range of charges, including VAT, education cess, Krishi Kalyan cess, green cess etc.

Now, these vehicles will see reduced taxation at 28 per cent.

Two-wheelers that fall into this category include the country's largest-selling scooter

Honda Activa

, and bikes like

Bajaj Pulsar

220, and

Royal Enfield

Bullet 350.

To further elaborate with an example, a Honda Activa 125 Standard used to cost Rs 57,001 out of a Delhi showroom till June 30. This included the 30 per cent tax in the previous tax regime.

From now, its price is set to go down to around Rs 56,124. By paying 2 per cent less as tax, one saves Rs 877.

The second category of two-wheelers, those above 350cc, also saw a similar 30 per cent tax earlier. Post-GST, the tax will fall to 28 per cent and an additional cess of 3 per cent will be levied. This will take the total tax to 31 per cent - one percent over what one would pay pre-GST.

This category of two-wheelers includes Royal Enfield's Bullet 500 and Classic 500. It also includes the Harley-Davidson cruiser Street 750, Harley-Davidson Street Rod, the

KTM

RC 390, and Bajaj Dominar.

For example, the ex-showroom price of a Royal Enfield Classic 500 Standard used to be Rs 1,71,000 till June 30. But in the GST structure, the price will go up to around Rs 1,72,315. That's a hike of more than Rs 1,300.

Prices of motorcycles from premium bike makers are also set to rise.

Ducati

India MD Ravi Avalur has confirmed this. "For Ducati, post the implementation of the GST, we will see a marginal increase in prices across the range," he said recently.

Pallavi Singh, director marketing, Harley-Davidson India, too, said, "There will be an increase in the prices effective July 1, 2017."

However, in most cases, the change in price - whether more or less - may not be as significant as to affect the customer's choice negatively.