Rajiv Bajaj To Govt: Even 350cc+ Motorcycles Should Get GST Cut, Here's Why

The central government of India is planning to cut down GST rates to just two slabs of 5 percent and 18 percent. Most expensive items like cars, bikes, and others will now be taxed under the 18 percent slab. As per reports, two-wheelers above 350cc will be taxed at 18 percent, while bikes below this threshold will be taxed at 5 percent. As a result, Rajiv Bajaj, Managing Director of Bajaj Auto, recently stated that the government should provide the same cut to 350cc motorcycles as well.

The short clip in which Bajaj MD Rajiv Bajaj shares his thoughts on the new GST rate cuts and 350cc bikes being excluded from the benefit has been shared on Instagram by CNBC on their page. It starts with the host highlighting that, as per the new GST cuts, two-wheelers over 350cc will now be taxed under the 18 percent slab instead of 28 percent.

To this, Rajiv Bajaj replied that the government of India is not doing any favor by reducing the tax bracket from 28 percent to 18 percent. He stated that 18 percent is still on the higher side and is 50 percent higher than the median of 12 percent. The Bajaj MD highlighted that he is very appreciative of the cut and that it is still fabulous and welcome; however, it is still high.

Does not make sense to tax 350cc two-wheelers differently

During the interview, Bajaj also raised an important point. He stated that 97–98 percent of the two-wheelers sold in India are under 350cc. So it does not make a lot of sense to leave out the 350cc and above segment at a higher tax rate. Bajaj asked why the government did not keep things simple and tax all two-wheelers at 18 percent.

Rajiv Bajaj continued by stating that creating a differentiating factor does not help with anything. Rather, there are two big distortions caused by implementing such brackets. The first is that the government, by introducing a difference in tax rates, is indirectly making automakers realign their product portfolios.

In simple words, the government drawing a line between different cc vehicles steers automakers toward producing more new products in the range where taxes are low. Secondly, he added that another distortion created is in global alignment. He explained that Indian industries are currently too low in the value chain.

He also talked about China, stating that China has moved much higher up in the chain. As per the Bajaj MD, authorities and businesspeople making such policies are, in a way, dumbing down Indian consumers. He highlighted that by incentivizing lower cc two-wheelers, people will be discouraged from buying more expensive two-wheelers, which is not good for the economy.

Netizens’ reactions

A number of netizens mentioned in the comments that the points raised by Rajiv Bajaj are valid. They added that Bajaj does not sell a lot of 350cc motorcycles. However, Rajiv Bajaj still raised the question on this policy so that the entire Indian two-wheeler industry gains the benefit.

Another netizen cited that this difference in tax rates does not add any value to tax collection. Rather, it has been done to send a message that buying luxury products in India is still seen as a bad thing.