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GST Changes 2025: Affordable Bikes, Budget Cars; Premium Models Costlier

Key Takeaways

  • Key Takeaway ImageGST on entry-level bikes (below 350cc) has been reduced from 28% to 18%, making daily commute two-wheelers much more affordable.
  • Key Takeaway ImageHigh-end motorcycles (350cc and above) now attract 40% GST, increasing the cost of premium and imported bikes.
  • Key Takeaway ImageCompact cars and hatchbacks benefit from a GST cut to 18%, giving budget-conscious buyers more savings.
  • Key Takeaway ImagePremium cars and SUVs face 40% GST, raising the price of bigger sedans and premium models.
17 Sep 2025 by Team FinFIRST
GST Rate Changes 2025 for Cars and Bikes
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The GST reduction on car and bike purchases has sparked joy among consumers, with automobile companies also cutting prices and passing on the extra benefit. But does that mean it’s the perfect time to buy a two-wheeler or four-wheeler? Before jumping to a conclusion, let’s understand how much the government has reduced GST rates for each category. Whether you’re planning to buy a car, bike, or electric scooter, let’s dive deeper into the price cuts and see which audience benefits the most.

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What is GST?
 

GST is known as Goods and Services Tax, an indirect tax levied by the government on products, services, commodities, etc. It is a comprehensive, destination-based tax applied to every product you buy.

GST on cars and bikes differs depending on the vehicle model, version, or whether it is foreign-made. When you buy a car from a dealer, you pay the ex-showroom price, which includes GST. This amount is paid indirectly to the dealer, who later sends it to the government.

GST 2.0 for Two-Wheelers
 

Earlier, the GST on bikes and two-wheelers was 28%. However, after the recent 56th GST Council meeting, the government revised the GST structure, making small motorcycles more affordable while premium bikes became costlier. For motorcycles with 350cc engine capacity and above, GST has increased from 28% to 40%. On the other hand, for bikes below 350cc, GST has been reduced from 28% to 18%, covering nearly 98% of the Indian motorcycle market.

Product Category

Past GST Rates

Current GST Rates

Bikes below 350 cc

28%

18

Bikes with 350 cc & above

28%

40%


This means that those looking for entry-level bikes for commuting or intercity travel will start enjoying the benefits. There are plenty of models to choose from, with brands ranging from Bajaj to Honda, helping buyers save extra money for essentials like insurance. Even if you’re planning to bring home a high-end sports bike on a tight budget, you still can. With fast, hassle-free, and seamless bike loan options, you could be driving your dream bike sooner than you think. You can get easy two-wheeler loans with IDFC FIRST Bank with instant approval and digital process.

GST 2.0 for For Cars
 

Similarly, we have observed some relief in car purchases under the updated GST structure. While luxury SUVs have seen a hike in GST rates, small cars have become more affordable.

Prices of imported cars and SUVs rise.

Petrol, CNG, or LPG cars with engine capacity above 1200 cc and diesel cars above 1500 cc with a length exceeding 4000 mm will now be charged 40% GST (without cess) under the revised structure. Earlier, these vehicles attracted 28% GST along with a high cess, taking the total tax rate to around 43–50%. With the new GST announcements, cars in this category will now be taxed at 40%. This includes bigger sedans, premium SUVs, and imported models such as the Toyota Innova Crysta, Mahindra Thar, Toyota Fortuner, Mahindra XUV700, and others.

Product Category

Past GST Rates

Current GST Rates

LPG, CNG, and petrol cars with 1200 cc

28% + Cess

40%

Diesel cars with 1500 cc

28% + Cess

40%


Small cars are now more affordable.
 

On the other hand, compact sedans and popular hatchbacks are expected to rise in demand, with GST rates reduced from 28% to 18%. This gives buyers a chance to consider owning the car they’ve always wished for. Models in this category include the Maruti Suzuki Alto K10, Swift Dzire, Fronx, Baleno, Hyundai Grand i10, Tata Punch, and many more.

Product Category

Past GST Rates

Current GST Rates

LPG, CNG, and petrol cars above 1200 cc

28% + Cess

18%

Diesel cars above 1500 cc

28% + Cess

18%


Owning a car is a great feeling; it brings pride and joy, whether it’s a brand-new purchase or a pre-owned one. After all, it’s something bought with your hard-earned money.

With IDFC FIRST Bank your car purchase can be easier and faster. Explore Car Loans to know more.

The revised GST rates make entry-level bikes and compact cars more affordable, while premium models attract higher taxes. Whether it’s a budget-friendly ride or a dream car, smart financing options ensure buyers enjoy smoother, cost-effective ownership. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.

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