This Diwali has brought double celebrations for millions of Indians, not just with lights and festivities but also with financial relief. The government announced a major GST reform for two-wheelers in 2025, reducing the Goods and Services Tax rate. This reform directly translates into lower prices for motorcycles and scooters, making them more accessible to the middle class, students, and rural buyers.
Two-wheelers are the backbone of India’s mobility, and this reform is expected to give a huge boost to both sales and affordability. Let’s take a closer look at the details of the Diwali GST reform, its impact on pricing, and what it means for consumers and the auto industry.
GST Reform for Two-Wheelers – What Has Changed?
Earlier, two-wheelers in India attracted 28% GST, placing them in the same tax category as luxury cars and SUVs. This has long been criticized by industry experts, as two-wheelers are not luxury products but essential means of transport for the masses.
With the Diwali 2025 GST reform, the government has announced:
- Reduction of GST from 28% to 18% on two-wheelers.
- Applicable on both motorcycles and scooters under 350cc.
- Hybrid and electric two-wheelers to enjoy an even lower rate of 12% GST.
This bold move reduces the tax burden and directly impacts ex-showroom prices.
How Much Cheaper Will Two-Wheelers Get?
The GST cut brings significant price reductions. Let’s break it down with examples:
- Hero Splendor+ (ex-showroom ~₹80,000)
- Old GST (28%): Added ~₹22,400 tax
- New GST (18%): Adds only ~₹14,400 tax
- Savings: ~₹8,000
- Honda Activa 6G (ex-showroom ~₹90,000)
- Old GST: ~₹25,200
- New GST: ~₹16,200
- Savings: ~₹9,000
- TVS Apache RTR 160 (ex-showroom ~₹1.25 lakh)
- Old GST: ~₹35,000
- New GST: ~₹22,500
- Savings: ~₹12,500
- Royal Enfield Bullet 350 (ex-showroom ~₹1.8 lakh)
- Old GST: ~₹50,400
- New GST: ~₹32,400
- Savings: ~₹18,000
For families and individuals planning to buy a new two-wheeler this festive season, this reform is nothing short of a windfall.
Why This Reform Matters
- Affordability Boost for Middle Class
Two-wheelers are the lifeline of India’s working class. With reduced GST, buyers can save anywhere between ₹7,000 to ₹20,000, making purchases more budget-friendly. - Rural and Semi-Urban Impact
Rural India relies heavily on motorcycles and mopeds for daily commuting. Price cuts make two-wheelers more accessible in regions where public transport is limited. - Encouragement for EV Adoption
The even lower 12% GST on electric two-wheelers makes models like the TVS iQube, Ola S1 Pro, and Bajaj Chetak more attractive to buyers. This aligns with India’s push toward sustainable mobility. - Festive Season Demand Surge
Diwali is traditionally a high-sales period for the auto industry. With the GST cut, dealerships are expecting record-breaking sales this festive season.
Industry Reactions
The GST reform has been welcomed across the automobile sector:
- Hero MotoCorp praised the move, saying it will “stimulate demand in rural and semi-urban markets.”
- Honda 2Wheelers India highlighted that scooters like Activa will now be more affordable for families.
- TVS Motor Company said the cut will “support both commuter and EV segments.”
- Royal Enfield expects stronger traction in the mid-size motorcycle category as prices come down by ₹15,000–₹20,000.
Dealers are already preparing for a surge in festive bookings.
Expected Impact on Sales
Before the reform, high GST rates were seen as a hurdle for two-wheeler growth. Now, with lower taxes:
- Hero MotoCorp is expected to sell record volumes of Splendor and HF Deluxe in rural areas.
- Honda may dominate scooter sales with Activa, Dio, and Shine in urban markets.
- TVS is likely to grow further in both scooters and EVs.
- Bajaj Auto will see renewed interest in Pulsar and Chetak Electric.
- Royal Enfield could attract first-time premium buyers who were earlier hesitant due to higher costs.
- Suzuki will benefit in the scooter and premium commuter bike segments.
Experts predict that two-wheeler sales in the October–December quarter of 2025 may see a 15–20% jump compared to last year.
Challenges Ahead
While the reform is positive, there are still challenges:
- Rising fuel prices may offset some savings on petrol motorcycles.
- EV adoption requires better charging infrastructure, even with tax benefits.
- Manufacturers may need to manage supply chain issues to meet festive demand.
Long-Term Benefits
- Boost to Manufacturing – Higher sales volumes will strengthen local production and generate employment.
- Sustainability Push – Lower GST on EVs will accelerate India’s transition to green mobility.
- Economic Growth – Increased two-wheeler sales contribute to GDP growth and rural economic activity.
Conclusion
The Diwali 2025 GST reform is a historic decision that directly benefits millions of Indian families. By slashing GST on two-wheelers from 28% to 18%, and further reducing it for EVs, the government has made bikes and scooters significantly cheaper.
For consumers, this means more affordable options this festive season. For the auto industry, it signals a surge in demand and a stronger foundation for growth.
As dealerships gear up for record-breaking festive sales, this Diwali is set to bring not just lights and celebrations, but also new rides and smiles across India’s roads.
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