GST 2.0 is set to reshape India’s automobile market. Two-wheelers under 350cc and entry-level cars become cheaper, while premium bikes and luxury cars face higher taxes. Discover how this reform impacts Hero Splendor, Honda Activa, Maruti Swift, Royal Enfield, and more.
The Indian automobile market is set to experience a change as the government implements GST 2.0, a significant tax reform that is expected to bring sanity, affordability, and balance into the two-wheeler and automobile prices. This reformation is likely to uplift the millions of purchasers, especially in the commuter motorcycles and scooter markets- the heart of the transport economy in India. Whilst certain groups will witness dramatic price reduction, there might be some that will have higher prices, in a delicate effort to rationalize the tax system along with the manufacturing priorities and the environmental objectives.
In a country where the market share of two-wheelers is almost 75 percent of all vehicle sales, the effect of GST 2.0 cannot be overrated. Whether it is middle-income families that are looking at buying a Hero Splendor or those who are in love with the Royal Enfield 650, all of them will be affected by this change in policy.
The Reason GST 2.0 Was Necessary
The complex indirect tax system in India was made easy with the introduction of the original Goods and Services Tax (GST) in 2017. Nevertheless, there were still gaps in the field of automobile taxation. Bikes and scooters below 350cc commonly incurred the same 28% GST plus cess as high-end motorcycles, which meant that entry-level goodies were out of proportionate reach to the middle income.
In the same manner, cars of mass market were subjected to high taxes even though they were a requirement to many families. This provided a paradox in which the luxury cars and cheaper ones were taxed nearly the same and this had raised concerns in affordability.
With India wanting to grow its domestic production and vehicle penetration in smaller towns, the government saw the necessity to reconsider and redesign GST in automobiles which saw the introduction of GST 2.0 in 2025.
Key Changes Under GST 2.0
GST reduced from 28% to 18%.
Price reduction:Rs 8,000- Rs22,000 depending on model and variant.
Two-Wheelers above 350cc
GST went up to 40% (comprising cess).
Price increase: Rs 25,000- Rs 60,000 on Royal Enfield 650cc, Harley-Davidson, Triumph, and imported.
Entry-Level Cars (up to 1200cc petrol / 1500cc diesel)
GST plunged to 5 percentage points.
Other models such as Maruti Swift, Tata Punch and Hyundai i20 are made cheaper.
Luxury Cars and SUVs No significant relief; cess is high to deny luxury imports an incentive.
The largest winners are two-wheeler consumers in the middle classes. Commuter bikes such as:
will also experience a huge drop in prices.
As an illustration the Honda Activa 125 has been lowered by almost Rs 9,500 and Hero Splendor Plus XTEC by approximately Rs 8,000. This is likely to initiate sales recovery particularly in rural and semi urban India where two-wheelers form lifeline in terms of mobility.
In comparison, high-end bikes will be pinched on the buyers. The Royal Enfield Interceptor 650 has been priced higher by more than Rs 35,000 and imported Harley-Davidson models have gone beyond the Rs 6 lakh mark.
As mass-market cars are more affordable, SUVs and luxury sedans will still have high tax brackets. The reasoning behind this by the government is obvious, stimulate first-time and middle-income consumers without altering a long-held luxury-primer-costs-more policy.
Less expensive Model: Maruti Swift, Hyundai i20, Tata Punch, Renault Kwid.
Prices are high: Toyota Fortuner, Jeep Compass, BMW 3 Series, Mercedes SUVs.
Industry Reactions
The Hero MotoCorp announced it as a game-changer in the commuter segment with sales to increase by a double-digit in the festive quarter.
Royal Enfield, on the other hand, feared that increased tax on the 350cc+ models might hurt the growth in the high end.
Honda dealers and Suzuki dealers have stated that there were an increase in inquiries within 48 hours of the announcement.
Dealer & Consumer Voices
Customers are coming in the store smiling at the price tags rather than bargaining as they have never done before. The Booking (Splendor and Activa) has increased two times more as compared to last week. -- Ravi Mehta, Hero dealer, Jaipur.
"I was saving for a Honda Shine. The Rs 9, 000 discounted will allow me to purchase it this month as opposed to a year later. -- Anita Yadav, a teacher at school, Lucknow.
Big bikes are now a luxury toy. The government obviously desires us to make a good choice when it comes to passion and practicality. -- Raj Malhotra, an IT professional, Bengaluru.
Electric Two-Wheelers & GST 2.0
Though the GST 2.0 targets directly the petrol powered two wheelers, its indirect impact on the electric two wheelers (EV) segment is significant. A reduced 5% GST rate has already been given to EVs, which is not going to change. This implies that such models as Ola S1 Pro, Ather 450X, Bajaj Chetak, and TVS iQube have become even more appealing as compared to petrol bikes.
- EVs (5% GST)
- Petrol bikes up to 350cc (18% GST)
- Premium petrol bikes (40% GST)
The message is understated yet obvious, the government is being reward in promoting greens but at the same time is safeguarding the conventional commuter with its affordable prices, said Soumen Mandal, Senior Analyst at Counterpoint Research.
Honda Two-Wheelers Price After Price Reduction
Honda Two-Wheeler GST 2.0 Reduced Rates
Up to ₹18,887 price reduction on models under 350cc
| Model | Category | Price Reduction |
|---|---|---|
| Activa 110 | Scooter | ₹7,874 |
| Dio 110 | Scooter | ₹7,157 |
| Activa 125 | Scooter | ₹8,259 |
| Dio 125 | Scooter | ₹8,042 |
| Shine 100 | Motorcycle | ₹5,672 |
| Shine 100 DX | Motorcycle | ₹6,256 |
| Livo 110 | Motorcycle | ₹7,165 |
| Shine 125 | Motorcycle | ₹7,443 |
| SP125 | Motorcycle | ₹8,447 |
| CB125 Hornet | Motorcycle | ₹9,229 |
| Unicorn | Motorcycle | ₹9,948 |
| SP160 | Motorcycle | ₹10,635 |
| Hornet 2.0 | Motorcycle | ₹13,026 |
| NX200 | Motorcycle | ₹13,978 |
| CB350 H'ness | Premium | ₹18,598 |
| CB350RS | Premium | ₹18,857 |
| CB350 | Premium | ₹18,887 |
According to dealers in the metro cities, petrol scooters are gradually being replaced by EV equivalents as more customers compare the two. Nevertheless, deficiencies in infrastructure are still a challenge. As Nikhil Pradhan, a dealer in TVS in Pune indicated:
Customers are fond of the low GST charge on EVs, but when they follow up with questions on the necessity of having charging stations in their locality, most of them become hesitant. The petrol scooters will continue to rule until we expand our infrastructures.
The introduction of GST 2.0 on the eve of the Navratri, Dussehra, and Diwali is tactical. The holiday period is known to cover 30-35. percent of the annual car sales.
Federation of Automobile Dealers Associations (FADA) believes that the industry may record the highest sales of its history in 2025 provided that there is stability in the supply chains. The demand of the two-wheelers is likely to be supported in rural markets due to the positive monsoon and the Evans may consider EVs as a second car in urban locations among millennials.
"This year could be historic. Demand will be sustained and we can even exceed the pre-pandemic highs as long as demand remains high, said Rajeev Sharma, Senior VP, FADA.
Although GST 2.0 will lower the initial ex-showroom prices, affordability will also rely on the choice of financing alternatives. Banks and NBFCs will be inclined to adjust in declining vehicle prices. An example is that a commuter bicycle that previously needed a loan of Rs 1.1 lakh can now fit into the Rs 1 lakh bracket to enable purchasers to enjoy cheaper EMIs.
According to Pradeep Nair, Senior VP, HDFC Bank Auto Loan Division, the lower principal amounts render the loans more accessible to the rural customers, in which cash purchase is predominant yet the formal credit is gradually increasing.
This sentiment is echoed by the consumers. After reducing the price, my EMI on TVS Raider will reduce by almost Rs 400 per month. This might not be a big amount, but in three years it saves me more than Rs 14,000, said Rohit Verma who is a lecturer in one college in Bhopal. This psychological change, according to dealers, of seeing both upfront and monthly costs reduce will only accelerate further even the demand in both Tier-2 and Tier-3 markets.
Other Cars Price Reduction Through GST 2.0
GST 2.0 Automotive Price Reductions
Comprehensive price cuts across all major automotive brands
| Model | Price Reduction |
|---|---|
| Bolero Neo | ₹1.27 lakh |
| XUV 3XO (Petrol) | ₹1.40 lakh |
| XUV 3XO (Diesel) | ₹1.56 lakh |
| Thar Range | Up to ₹1.35 lakh |
| Thar Roxx | ₹1.33 lakh |
| Scorpio Classic | ₹1.01 lakh |
| Scorpio N | ₹1.45 lakh |
| XUV700 | ₹1.43 lakh |
| Model | Price Reduction |
|---|---|
| Tiago | ₹75,000 |
| Tigor | ₹80,000 |
| Altroz | ₹1.10 lakh |
| Punch | ₹85,000 |
| Nexon | ₹1.55 lakh |
| Harrier | ₹1.40 lakh |
| Safari | ₹1.45 lakh |
| Curvv | ₹65,000 |
| Model | Price Reduction |
|---|---|
| Fortuner | ₹3.49 lakh |
| Legender | ₹3.34 lakh |
| Hilux | ₹2.52 lakh |
| Vellfire | ₹2.78 lakh |
| Camry | ₹1.01 lakh |
| Innova Crysta | ₹1.80 lakh |
| Innova Hycross | ₹1.15 lakh |
| Other Models | Up to ₹1.11 lakh |
| Model | Price Reduction |
|---|---|
| Range Rover 4.4P SV LWB | ₹30.4 lakh |
| Range Rover 3.0D SV LWB | ₹27.4 lakh |
| Range Rover 3.0P Autobiography | ₹18.3 lakh |
| Range Rover Sport 4.4 SV Edition Two | ₹19.7 lakh |
| Velar 2.0D/2.0P Autobiography | ₹6 lakh |
| Evoque 2.0D/2.0P Autobiography | ₹4.6 lakh |
| Defender Range | Up to ₹18.6 lakh |
| Discovery | Up to ₹9.9 lakh |
| Discovery Sport | ₹4.6 lakh |
| Model | Price Reduction |
|---|---|
| Sonet | ₹1.64 lakh |
| Syros | ₹1.86 lakh |
| Seltos | ₹75,372 |
| Carens | ₹48,513 |
| Carens Clavis | ₹78,674 |
| Carnival | ₹4.48 lakh |
| Model | Total Benefits |
|---|---|
| Kodiaq | ₹5.8 lakh ₹3.3L GST + ₹2.5L festive |
| Kushaq | ₹3.16 lakh ₹66K GST + ₹2.5L festive |
| Slavia | ₹1.83 lakh ₹63K GST + ₹1.2L festive |
| Model | Price Reduction |
|---|---|
| Grand i10 Nios | ₹73,808 |
| Aura | ₹78,465 |
| Exter | ₹89,209 |
| i20 | ₹98,053 |
| i20 N-Line | ₹1.08 lakh |
| Venue | ₹1.23 lakh |
| Venue N-Line | ₹1.19 lakh |
| Verna | ₹60,640 |
| Creta | ₹72,145 |
| Creta N-Line | ₹71,762 |
| Alcazar | ₹75,376 |
| Tucson | ₹2.4 lakh |
| Model | Price Reduction |
|---|---|
| Kiger | ₹96,395 |
| Model | Price Reduction |
|---|---|
| Alto K10 | ₹40,000 |
| WagonR | ₹57,000 |
| Swift | ₹58,000 |
| Dzire | ₹61,000 |
| Baleno | ₹60,000 |
| Fronx | ₹68,000 |
| Brezza | ₹78,000 |
| Eeco | ₹51,000 |
| Ertiga | ₹41,000 |
| Celerio | ₹50,000 |
| S-Presso | ₹38,000 |
| Ignis | ₹52,000 |
| Jimny | ₹1.14 lakh |
| XL6 | ₹35,000 |
| Invicto | ₹2.25 lakh |
| Model | Price Reduction |
|---|---|
| Magnite Visia MT | ₹1 lakh |
Policy Connections: Make in India and Atmanirbhar Bharat.
Taxation is not all GST 2.0 is being about--it is linked to wider policy objectives. The government has been encouraging local production by reducing taxes on commuter bikes and cars that are manufactured locally. At the same time, increasing the tax on luxury imports is in line with the vision of Atmanirbhar Bharat because it will decrease the reliance on luxury imports of the country.
Moreover, the promotion of EVs with the help of a preferential tax environment suits the climate obligations of India as well as green mobility goals. Policymakers regard this as a more moderate solution - demand stimulation, shielding small consumers, strengthening the local industry, and pushing consumers towards becoming more sustainable.
Indonesia also provides low emission vehicles with reduced VAT.
Vietnam levies more excise taxes on imported motorcycles.
China has massive subsidies on EVs and it has high taxes on imported luxury vehicles.
GST 2.0 is an indication of the effort that India has made to evolve such international strategies to fit in its local market- where consumers are more about affordability and access rather than luxury consumption.
Challenges Ahead
Premium motorcycle manufacturers can reduce launches in India.
The adoption of EV could remain low unless there is sufficient charging networks.
States will be forced to coordinate on consistent implementation of GST changes.
The government still has a concern on revenue neutrality that the decrease in taxes within a category should be compensated by the rise in other categories.
Economists project a 15-18 percent growth in two-wheeler sales whereas the car sales will increase at a relatively slower pace of 8-10 percent the next year. The sales of the premium bikes, however, may decrease as fans re-evaluate affordability.
In case GST 2.0 is successful, other industry-based GST justifications can come in real estate, electronics, and consumer durables. India has middle-class riders and small-car purchasers as the obvious beneficiaries of this reform, as of now.
The introduction of GST 2.0 is a watershed of the automobile industry in India. The government has dealt with affordability issues of the middle income directly through lowering taxes on the most basic commuter bikes and entry-level cars. Simultaneously, it has indicated that consumption of luxury will no longer be underwritten to favor ordinary consumers.
Another benefit is that the dream of having a two-wheeler or a car has been made possible to millions of households. To the industry, it is a lifeline in terms of volumes before the festive time. And to policy makers, yet again it is a move in the right direction by aligning taxation with growth, equity and sustainability.
Disclaimer: The price reductions are effective immediately on all new car purchases and reflect the updated ex-showroom rates under the new GST 2.0 tax structure. Due to local taxes and dealer margins, final prices may differ slightly between states and are only applicable to vehicles of the current model year while supplies last. The discounted rates do not include handling, insurance, accessories, or registration fees. Government tax policy changes could affect future prices. For precise pricing and availability, please get in touch with the authorized dealers that is closest to you.
External links: CarDekho, CarWale, GaadiWaadi, GST 2.0
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