When discussing vehicles like bikes, scooters, or cars, the engine capacity, often expressed in cubic centimeters (CC), is a primary point of reference. From advertisements to showrooms, terms like 100cc, 350cc, or 2000cc are common. This raises the question: why is engine capacity measured in CC? What does it signify, and how does it influence taxes, particularly the Goods and Services Tax (GST) rate?
CC, which stands for cubic centimeter, represents the measurement of space within an engine’s cylinder where the fuel and air mixture combusts to generate energy. Essentially, a higher CC indicates a greater capacity for fuel and air, translating to increased power output. A 100cc scooter is suitable for short, everyday commutes and offers good mileage. A 350cc motorcycle provides more power, suitable for longer journeys and highway performance. Cars typically feature engines ranging from 1000cc to 2000cc.
There’s a direct relationship between CC and liters. An engine with 1000cc is also expressed as 1 liter. Both CC and liters are units of volume measurement, with 1 liter equaling 1000 cubic centimeters (1000cc). The engine’s size reflects the volume of space where the fuel and air mixture combusts to produce power. Automakers and consumers often round off engine capacities for simplicity; for instance, a 1197cc engine is referred to as a 1.2-liter engine, while a 1498cc engine is called a 1.5-liter engine. Liters are internationally more accessible for the general public, whereas CC is a technical measure. For cars and large bikes, engine capacity typically exceeds 1000cc, making it easier to express in liters. Smaller bikes and scooters often use CC, with capacities like 100cc, 150cc, or 350cc.
The government has linked engine capacity (CC) to GST to simplify the tax system and maintain price balance in vehicles. This is because vehicles with larger engines tend to consume more fuel, offer greater power, and often have higher prices. Consequently, the government decided to impose lower taxes on vehicles with smaller engines and higher taxes on those with larger engines.
The recent GST 2.0 also follows this principle. Motorcycles with engines below 350cc attract an 18% GST, making them more affordable for consumers. Larger bikes with engines exceeding 350cc face a higher tax rate of 40%. For cars, lower taxes apply to petrol engines up to 1.2 liters and diesel engines up to 1.5 liters, making hatchback and sub-compact cars more economical. However, SUVs and luxury cars with engines above 1500cc are subject to a higher GST of 40%.