Vehicle GST Cut: Motorcycles up to 350cc and small cars will be cheaper, know how much tax will be on big bikes?

The GST Council reduced the tax on bikes up to 350cc and small cars from 28% to 18%. The new GST structure will be implemented from September 22, demand will increase before the festivals and customers will get relief.

There is great news for people planning to buy small cars and motorcycles in India. The GST Council has made a big change in the tax rates and implemented a new two-tier GST structure, which will be effective from September 22. After this decision, many essential goods and vehicles will become cheaper than before.

Goods will become cheaper before the festivals.
In this historic decision of the council, tax has been reduced on TVs, small cars, processed food and daily essential goods. The government's aim is to increase demand before the upcoming festival season and provide relief to the people.

10% relief on bikes and small cars
A big relief has been given in the new GST rate structure announced on Wednesday. Now the tax on bikes up to 350cc and small cars has been reduced by 10 percent. Earlier they were taxed at 28 percent, but now they have come in the 18 percent slab. At the same time, bikes with engines more than 350cc will be considered luxury goods and a new 40 percent slab will be applicable on them. This change will come into effect from September 22. That is, customers will get direct benefit and the prices of vehicles will decrease.

No change on electric vehicles
No new rate has been implemented for electric vehicles at present. All EVs will still remain in the 5% slab, which will give relief to the electric vehicle market.

Now only two slabs will be applicable
Prime Minister Narendra Modi had already indicated to simplify the tax slabs. Now there will be only two main slabs in GST -

• 5% for essential items
• 18% for non-essential goods

Earlier there were slabs of 12 percent and 28 percent, which have now been abolished. At the same time, a new slab of 40 percent will come for those products which are called "sin goods". Such as tobacco and expensive cars and big bikes worth more than Rs 50 lakh.

What would be called a "small car" now?
According to the new definition, now a small car will be one whose length is not more than 4000 mm and which has either a petrol engine up to 1200cc or a diesel engine up to 1500cc. Earlier 28 percent GST was levied on these cars, but now the tax has been reduced to 18 percent. That is, customers will get direct relief on these vehicles.

Big bikes will be expensive
Bikes with engines of more than 350cc will now be more expensive than before. Earlier 28 percent GST was levied on them and along with that 3-5 percent cess was also added. That is, the total tax used to be about 32 percent. But now after the new rule comes into force, a flat tax of 40 percent will be directly levied on them. That is, more burden will fall on the price of vehicles than before.

What will be the impact on big cars?
Cars that do not fall under the definition of "small car" will now be taxed at 40 percent. But this does not mean that the tax has increased more than before. Earlier, these were taxed at 28 percent with a cess of about 15 percent, that is, a total of about 42 percent tax had to be paid. Now instead of this, a flat tax of 40 percent will be levied. All cars with more than 1,200 cc of petrol and more than 1,500 cc of diesel will be taxed at 40 percent. This will benefit the customers as the total tax burden will be reduced slightly.

How much GST on other vehicles
Auto parts, which earlier had different rates, will now be taxed at a uniform rate of 18 percent. And GST on three-wheelers has been reduced from 28 to 18 percent. Large vehicles like buses, trucks and ambulances will also come under the 18 percent slab. Planes for personal use will be taxed at 40 percent GST.

Both consumers and industry will benefit
Finance Minister Nirmala Sitharaman, who chaired the meeting, called it a "next-generation GST reform". According to her, this decision will not only simplify the tax system but will also provide great relief to the common people and the industry.

Sectors like automobile and FMCG, which were facing demand slowdown due to heavy tax burden, can now pick up pace again with this decision.

PC:Hyundai/ Mahindra/MAruti Suzuki/ Hero Motocorp/Roual Enfies/Amar Ujala