Budge Friendly Bikes Ahead: The Government’s recent GST rate cut on two-wheelers below 350cc is set to make bikes more affordable for lakhs of Indian buyers. The new tax rate will reduce on-road prices, bringing down both loan amounts and monthly EMIs, a major relief for students, professionals, and daily commuters.
GST Rate Cut: What’s Changed?
Earlier, all motorcycles attracted 28% GST, regardless of engine capacity. The government has now revised the structure:
| Engine Capacity | Old GST Rate | New GST Rate | Impact |
|---|---|---|---|
| Bikes up to 350cc | 28% | 18% | Cheaper bikes, lower EMIs |
| Bikes above 350cc | 28% | 40% | Costlier premium bikes |
This move will directly benefit brands such as Hero MotoCorp, Bajaj Auto, Honda, and TVS, which dominate the commuter and mid-range motorcycle segment. However, premium brands like Royal Enfield and KTM, with higher engine capacities, will now see an increase in on-road prices.
How GST Cut Affects Your Bike Loan and EMI
A lower GST means a lower on-road price, and since most banks finance 80–100% of that value, buyers will borrow less and pay smaller EMIs.
Bike Under 350cc Example
| Particulars | Before GST Cut (28%) | After GST Cut (18%) |
|---|---|---|
| On-road Price | ₹2,00,000 | ₹1,84,000 |
| Loan Amount (90% financed) | ₹1,80,000 | ₹1,66,000 |
| Interest Rate (12% p.a.) | ₹5,979/month | ₹5,514/month |
| Monthly EMI Savings | — | ₹465 less |
So, a buyer opting for a 3-year loan at 12% interest now saves nearly ₹465 every month, or ₹16,740 over the loan tenure.
Who Benefits the Most?
The 18% GST rate will make bikes below 350cc far more accessible to first-time buyers, college students, and rural consumers. In smaller towns, where motorcycles are the backbone of daily mobility, the price cut will boost sales and improve affordability.
Rural and semi-urban riders: Farmers, delivery agents, and small traders will see a direct benefit. Urban commuters: Working professionals and gig workers (like Zomato or Swiggy riders) will find low-EMI options more attractive. Manufacturers: Brands such as Hero, TVS, and Bajaj are likely to witness a sales uptick in the festive months ahead.
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Current Two-Wheeler Loan Interest Rates (October 2025)
Interest rates vary by bank and borrower profile. Here’s how top banks are currently pricing their two-wheeler loans:
| Bank Name | Interest Rate (p.a.) | Loan Coverage | Tenure |
|---|---|---|---|
| HDFC Bank | Starts from 14.5% | Up to 95% | Up to 48 months |
| ICICI Bank | Starts from 10.25% | Up to 100% | Up to 60 months |
| Axis Bank | Up to 90% | Up to 90% | Up to 48 months |
| State Bank of India (SBI) | 13.1%–14.6% | Up to 90% | Up to 48 months |
| Punjab National Bank (PNB) | 11.75%–13.5% | Up to 85% | Up to 60 months |
| Bank of Baroda | 12%–14% | Up to 90% | Up to 48 months |
Premium Segment Impact
While the affordable segment gains, premium motorcycles above 350cc now attract 40% GST with cess. This may increase prices of bikes like Royal Enfield Himalayan 450, Interceptor 650, and KTM 390 Duke, making them costlier to own and finance.
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Conclusion on Budge Friendly Bikes
The GST rate cut is a clear win for affordable mobility in India. With on-road prices dropping and EMIs turning lighter, more buyers are likely to opt for new bikes this festive season. For those planning to purchase a motorcycle under 350cc, October 2025 is one of the best times to make that move.