Cigarettes, tobacco, aerated drinks likely to get expensive as GST may rise to 35%: Report
By Gargi Chaudhry | First Published Dec 3, 2024, 12:23 PM ISTThe Group of Ministers (GoM) has proposed a GST increase to 35% on items like aerated beverages and tobacco products. Changes to apparel GST rates are also suggested, ranging from 5% to 28% based on price. The GST Council will review these proposals on December 21, 2024.
The Group of Ministers (GoM) on GST rate rationalisation has proposed increasing the tax on products such as aerated beverages, cigarettes, and other tobacco-related items to 35%, up from the current rate of 28%, reported news agency PTI. This choice may be a component of a larger initiative to modify the tax rates on certain items in order to improve revenue collection.
The GoM, led by Bihar Deputy Chief Minister Samrat Choudhary, met on Monday to finalise the proposed rate adjustments. Alongside the hike for "sin goods," changes to the GST structure for apparel and other items were also discussed.
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As per the decision, readymade garments costing up to Rs 1,500 would attract 5 per cent GST, those between Rs 1,500 and Rs 10,000 would attract 18 per cent. Garments costing above Rs 10,000 would attract 28 per cent tax.
With the hope that the revisions will increase revenue, the GoM has proposed tax changes for a total of 148 goods. On December 21, 2024, the GST Council will hear the GoM's report. The ultimate decision about the suggested adjustments will be made by the council, which is led by the Union Finance Minister and includes state finance ministers.
"The GoM has consented to suggest a special rate of 35% on aerated drinks, tobacco products, and associated goods. The additional 35% rate would be added to the current four-tier tax system of 5%, 12%, 18%, and 28%," an official was reported by PTI as saying.
Under the GST system, essential items are either exempt or taxed at the lowest slab, while luxury and demerit goods are taxed at higher rates. Along with the highest slab rate of 28%, there is also a cess on demerit items including tobacco products and aerated beverages, as well as luxury goods like vehicles and washing machines. The council will use the GoM's suggestions to determine if rate rationalization may be expanded. The council may also choose to prolong the GoM's authority to examine GST rates on a regular basis.
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