BMW expresses concerns over slow GST 2.0 decision-making, suggesting it may negatively affect new vehicle sales.

In a significant development, the upcoming Goods and Services Tax (GST) slabs for motorcycles are set to undergo a revamp, potentially bringing both benefits and challenges for the two-wheeler industry in India.

The current GST framework consists of four slabs - 5%, 12%, 18%, and 28%. However, under the proposed restructuring, the 12% and 28% slabs will be removed, while the 5% and 18% rates will continue. This reform aims to simplify the existing complex tax structure by introducing two main GST rates of 5% and 18%, with a new 40% rate category specifically for luxury goods, including some high-end vehicles.

Smaller ICE motorcycles up to 350cc are spared any additional cess, while bigger bikes face an additional 3% levy. This could potentially benefit commuters and entry-level motorcycles, making them noticeably cheaper. However, the fast-growing middle-weight and premium segments may face challenges due to the heavier tax burden.

Industry reports suggest that there could be two GST slabs for motorcycles - 18% for smaller entry-level two-wheelers and a heavier tax burden for higher displacement models (above 350cc). This could impact companies like Royal Enfield, a global leader in the 250cc-750cc category, which has called for a uniform GST rate of 18% across all two-wheelers.

Royal Enfield's Managing Director, Siddhartha Lal, wrote on Instagram that lowering GST for under-350cc motorcycles would help broaden access, but raising GST for above-350cc could damage a segment vital to India's global edge. The company argues that the current differential tax structure risks slowing down the growth of India's fast-expanding mid-capacity motorcycle segment.

BMW Group India, which recorded its best-ever first-half performance in 2025, has also urged the government to move swiftly on the new GST rates due to the uncertainty it has caused among consumers. The upcoming GST council meeting on September 3-4th is expected to provide updates on the proposed GST slabs for motorcycles.

It's worth noting that electric cars currently enjoy a concessional 5% GST with no additional cess, while internal combustion engine (ICE) models are taxed at 28% GST with an extra cess of up to 22%. Under the proposed GST revamp, luxury cars are likely to be shifted to a 40% slab. However, the total levy on some ICE models can be close to 50% due to the additional cess.

The new GST slabs for motorcycles could have a significant impact on the two-wheeler industry in India. As the government moves forward with the proposed changes, it will be interesting to see how the industry adapts and how consumers are affected.

BMW expresses concerns over slow GST 2.0 decision-making, suggesting it may negatively affect new vehicle sales.