Looking for expert help with Income tax and GST for bicycle shop owners India? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- From 22 September 2025, non-motorised bicycles and their parts and accessories are 5% Goods and Services Tax (GST), down from 12% (Notification 9/2025-Central Tax (Rate), Schedule I, S. No. 456 and 458).
- Bicycle tyres and tubes are 5%. E-bicycles are 5% as electrically operated vehicles (S. No. 441).
- Cycle lights, batteries, and cycles with an auxiliary engine are 18% (Schedule II).
- Bill repair labour on its own line, separate from the 5% parts.
- Under Section 44AD, deemed profit is 6% of digital receipts and 8% of cash. Moving cash sales to UPI lowers the figure.
What is the GST rate on bicycles in India? From 22 September 2025, bicycles and other cycles that aren't motorised, including delivery tricycles, attract 5% GST under Schedule I of Notification 9/2025-Central Tax (Rate). Their parts and accessories are also 5%. E-bicycles are 5%, but cycle lights and batteries are 18%.
Most of a bicycle shop now sits in one slab. The cycle, the tyre, the chain and the brake set are all 5%. The 18% items are the ones that look like accessories but aren't in the bicycle parts entry: the battery headlamp, the e-bike battery and anything with a petrol engine. The GST rate cut in September 2025 also lowered the price on the floor. A cycle that cost Rs 7,500 before tax used to sell for Rs 8,400 at 12%; at 5% it's Rs 7,875. This guide covers which rate applies to what you sell for AY 2026-27, how to bill repairs, and how your income tax is worked out.
What GST rate applies to what you sell?
Comparison
GST Rates for Bicycle Shop Items (from 22 September 2025)
| Item | HSN | GST rate |
|---|---|---|
| Bicycles and other cycles (including delivery tricycles), not motorised | 8712 | 5% |
| Parts and accessories of non-motorised bicycles and cycles | 8714 | 5% |
| Tyres and inner tubes of a kind used on bicycles and cycle-rickshaws | 4011 / 4013 | 5% |
| Electrically operated vehicles, including e-bicycles | 87 | 5% |
| Toy tricycles, scooters and pedal cars, other than electronic | 9503 | 5% |
| Electrical lighting or signalling equipment of a kind used for cycles | 8512 | 18% |
| Electric accumulators (batteries) | 8507 | 18% |
| Motorcycles and cycles fitted with an auxiliary motor, up to 350 cc | 8711 | 18% |
| Parts and accessories of vehicles of heading 8711 | 8714 | 18% |
| Electronic toys like tricycles, scooters and pedal cars | 9503 | 18% |
Source: Notification 9/2025-Central Tax (Rate), Schedule I S. No. 272, 441, 456, 458, 497; Schedule II S. No. 480, 485, 546, 547, 616
Within your state you charge half as CGST and half as SGST, so 2.5% + 2.5% or 9% + 9%. To another state it's the full rate as IGST. Stock a supplier invoiced before 22 September 2025 keeps the input tax credit (ITC) at whatever rate the supplier charged. Your sale today goes out at the current rate.
Which items do bicycle shops bill at the wrong rate?
The 5% parts entry is narrow in one way: it covers parts and accessories "of heading 8712", meaning cycles that aren't motorised. Goods with their own heading in the tariff stay under that heading. Three cases cause most errors:
- Cycle lights. Lighting equipment "of a kind used for cycles or motor vehicles" is listed under heading 8512 at 18%. It doesn't move to 5% because it's fitted to a cycle.
- E-bike batteries and parts. The e-bicycle itself is 5%. Its battery is an electric accumulator at 18%. Other e-bike parts aren't covered by the 5% entry for non-motorised cycles, so check the HSN on the supplier's invoice.
- Kids' ride-ons. A pedal car or toy tricycle is 5%. The battery-run version is an electronic toy at 18%.
Say you sell a rechargeable cycle headlamp for Rs 590 including GST. At 18%, the tax in it is Rs 90 (590 x 18/118). If your billing software puts it under the 5% parts code, it shows Rs 28 (590 x 5/105), and you've under-reported Rs 62 on one sale. Set up each product with its own HSN and rate, so counter staff never pick a rate by hand.
If a combo is sold at one price, such as a cycle with a headlamp and lock thrown in, the rate depends on how it's supplied. Under Section 8 of the Central Goods and Services Tax (CGST) Act, a composite supply that is naturally bundled is taxed at the rate of the principal supply, while a mixed supply is taxed at the highest rate in it. The simplest way to avoid the question is to price each item on its own line.
For wider vehicle parts and tyre rates, see our GST guide for auto spare parts and tyre shops.
How should you bill repairs and servicing?
Most cycle shops earn some income from puncture repairs, servicing and fitting. Parts are goods at 5%. Your labour is a service. Show them as separate lines on the invoice: the tube and brake shoes with HSN 4013 and 8714 at 5%, and the labour with its own SAC code and rate.
Separate lines also help if you're on the composition scheme, which caps how much service income you can have.
When do you need GST registration?
If you only sell goods, registration is required once aggregate turnover crosses Rs 40 lakh in most states. Telangana and several other states kept the Rs 20 lakh limit (Notification 10/2019-Central Tax). Selling to a buyer in another state needs registration from the first rupee (Section 24(i), CGST Act). Our GST registration service can set this up for you.
Regular scheme or composition?
Under the composition scheme, a trader pays 1% of turnover (Rule 7, CGST Rules), up to Rs 1.5 crore a year. You can't charge GST on your bill, can't claim ITC and can't sell to other states (Section 10(2)(c), CGST Act). Repair and other services are allowed up to 10% of the previous year's turnover in the state or Rs 5 lakh, whichever is higher (Section 10(1), CGST Act).
With most stock at 5%, the answer turns on your margin:
- Thin margin. A cycle bought for Rs 6,000 plus Rs 300 GST and sold at Rs 7,350. Regular scheme: GST in the price is Rs 350, you pay Rs 50 after ITC and keep Rs 1,000. Composition: you pay Rs 73.50 and keep Rs 976.50. The regular scheme leaves Rs 23.50 more.
- Wider margin. The same cycle sold at Rs 8,400. Regular scheme: GST in the price is Rs 400, you pay Rs 100 and keep Rs 2,000. Composition: you pay Rs 84 and keep Rs 2,016. Composition leaves Rs 16 more.
On a 5% cycle, composition only comes out ahead once the selling price is above about Rs 7,975 for that Rs 6,300 cost. These per-item numbers leave out GST on rent and other expenses, which you can claim as ITC under the regular scheme, so run the comparison on your whole shop. Composition also stops making sense if you supply schools, delivery firms or other shops that want a tax invoice to claim ITC. See our composition scheme guide for the full conditions.
How is your income taxed for AY 2026-27?
Section 44AD lets a resident individual, HUF or partnership firm (not an LLP) declare a deemed profit instead of keeping full books. The limit is Rs 2 crore of turnover, or Rs 3 crore where cash receipts are within 5% of total receipts. The deemed profit is 6% of receipts by UPI, card or bank and 8% of cash receipts. You can declare more than this.
Example 1 (Rs 80 lakh turnover, new regime): Rs 60 lakh comes by UPI and card, Rs 20 lakh in cash.
- Deemed profit: 6% of Rs 60 lakh (Rs 3,60,000) plus 8% of Rs 20 lakh (Rs 1,60,000), so Rs 5,20,000.
- Tax: 5% of Rs 1,20,000, so Rs 6,000.
- The Section 87A rebate covers income up to Rs 12 lakh. Tax payable: nil, assuming no other income.
Example 2 (Rs 2.6 crore turnover, new regime): A dealer selling geared cycles and e-bicycles takes Rs 10 lakh in cash (about 3.8% of receipts), so the Rs 3 crore limit applies. The other Rs 2.5 crore is digital.
- Deemed profit: 6% of Rs 2.5 crore (Rs 15,00,000) plus 8% of Rs 10 lakh (Rs 80,000), so Rs 15,80,000.
- Tax: Rs 20,000 + Rs 40,000 on the slabs up to Rs 12 lakh, plus 15% of Rs 3,80,000 (Rs 57,000). Total Rs 1,17,000. No 87A rebate above Rs 12 lakh. Add 4% cess of Rs 4,680. Tax payable: Rs 1,21,680.
If that dealer's cash had been Rs 15 lakh (about 5.8%), the Rs 3 crore limit wouldn't apply, and at Rs 2.6 crore it would need books and a tax audit.
Step-by-Step Guide
Before You Declare Less Than the Section 44AD Figure
Check the last five years
If you declared under Section 44AD in any of them, going below it now bars you from Section 44AD for the next five assessment years (Section 44AD(4)).
Check the audit trigger
Under that bar, if your income is above the basic exemption limit you must keep books and get a tax audit (Sections 44AD(5) and 44AB(e)).
Check the turnover audit limit
Filing on books above Rs 1 crore turnover needs an audit under Section 44AB, unless cash receipts and cash payments are each within 5%, which raises the limit to Rs 10 crore.
Make sure the books support the figure
Your GST returns and bank statements show your sales. A declared profit well below what they imply has to be backed by proper accounts.
File the right form
ITR-4 for Section 44AD if total income is within Rs 50 lakh and other conditions are met; ITR-3 if you file on books (a partnership firm files ITR-5 instead).
Source: Sections 44AA, 44AB, 44AD and 87A, Income-tax Act 1961; Finance Act 2025
See our Section 44AD guide and old vs new regime guide.
Common mistakes bicycle shops make
- Putting cycle lights under the parts code. Lighting equipment for cycles is heading 8512 at 18%, not 8714 at 5%.
- Billing e-bike batteries at the cycle rate. The e-bicycle is 5%; a spare battery is 18%.
- Treating a cycle with a petrol engine kit as a bicycle. Cycles fitted with an auxiliary motor are heading 8711 at 18%, and so are their parts.
- One line for parts and labour. Repair labour is a service. Keep it separate from 5% parts, and track it if you're on composition.
- Charging the old 12% on stock bought before the cut. The rate on your sale is the rate on the day you sell, whatever your supplier charged.
How Tax Garden helps bicycle retailers
We set up your item master with the right HSN and rate for every cycle, part and accessory, then file GSTR-1 and GSTR-3B with repairs reported correctly. See our GST return filing service. We also compare composition against the regular scheme on your real margins, and prepare your ITR on Section 44AD or books; see our ITR filing service and pricing. If you also stock kids' toys, see our GST guide for toy shops.
