When discussing vehicles, the engine’s capacity, usually measured in cubic centimeters (CC), is one of the first specifications mentioned. Why is CC used to measure engine capacity? What does it mean, and how does it affect GST rates?
CC, or cubic centimeter, measures the volume within an engine cylinder where the fuel and air mixture combusts to generate energy. In essence, a higher CC means the engine can accommodate more fuel and air, leading to more power. A 100cc scooter is perfect for short distances and efficient fuel consumption. A 350cc motorcycle offers more power, suitable for long trips and highways. Cars often have engine sizes ranging from 1000cc to 2000cc.
The relationship between CC and liters is that 1000cc equals 1 liter. Both are units of volume. The engine’s size represents the volume where the fuel and air mix and combust. Automakers and consumers often simplify engine capacity by rounding off. For example, a 1197cc engine is often called a 1.2-liter engine, and a 1498cc engine is referred to as a 1.5-liter engine. Liters are more easily understood by people globally, whereas CC is a more technical term. Cars and large bikes generally have engines above 1000cc, making it easier to express their capacity in liters. Smaller bikes and scooters typically use CC, such as 100cc, 150cc, or 350cc.
The government uses CC as a basis for GST rates to simplify the tax system and control vehicle costs. Generally, vehicles with larger engines use more fuel and have a higher price tag. Therefore, the government set up a system where smaller-engined vehicles have lower taxes, and larger-engined vehicles have higher taxes.
The latest GST 2.0 update reflects this principle. Motorcycles with engines under 350cc are taxed at 18%, making them more affordable. Larger motorcycles with engines exceeding 350cc are taxed at a higher rate of 40%. For cars, engines up to 1.2 liters (petrol) and 1.5 liters (diesel) are taxed at a lower rate, benefiting hatchback and sub-compact car buyers. SUVs and luxury cars with engines above 1500cc are subject to a 40% GST.