Cigarettes, tobacco items, aerated beverages may attract higher 35% GST; decision on Dec 21

The Group of Ministers (GoM) on GST rate rationalisation has decided to increase taxes on sin goods, including aerated beverages, cigarettes, and tobacco products, from 28% to 35%, reported PTI, citing an official as saying. The GoM, led by Bihar Deputy Chief Minister Samrat Chaudhary, also revised tax rates for apparel.

As per the new structure, readymade garments priced up to Rs 1,500 will attract 5% GST, while those costing between Rs 1,500 and Rs 10,000 will face an 18% tax. Garments priced above Rs 10,000 will be taxed at 28%,the PTI report said.

In total, the GoM plans to recommend changes to GST rates on 148 items to the GST Council. An official noted that these adjustments are expected to have a positive impact on revenue.



GST hike on tobacco, cigarettes fixed?
The GoM report is expected to be discussed by the GST Council -- chaired by Union Finance Minister and comprising her state counterparts -- on December 21. A final decision on GST rate changes will be taken by the council.

"The GoM has agreed to propose a special rate of 35 per cent on tobacco and related products and aerated beverages. The four-tier tax slab of 5, 12, 18, and 28 per cent will continue and a new rate of 35 per cent is proposed by the GoM," said the official.

Currently, GST is a four-tier tax structure with slabs at 5, 12, 18, and 28 per cent.

Under GST, essential items are either exempted or taxed at the lowest slab, while luxury and demerit items attract the highest slab. Luxury goods like car, washing machine, and demerit goods like aerated water and tobacco products attract cess on top of the highest 28 per cent slab.


The official said the GoM on rate rationalisation has finalised its report on Monday to be presented before the council.

The council will now decide whether there is further scope for rate rationalisation and may decide to retain the GoM so that the rationalisation exercise continues periodically, the official added.

In its last meeting in October, the GoM had proposed reducing GST on packaged drinking water of 20 litres and above to 5 per cent from 18 per cent.

It had also decided to propose to the council to reduce GST on bicycles costing less than Rs 10,000 to 5 per cent, from 12 per cent.

Also, GST on exercise notebooks would be reduced to 5 per cent from 12 per cent. The GoM also proposed hiking GST on shoes above Rs 15,000/pair from 18 per cent to 28 per cent.

It also proposed hiking GST on wrist watches above Rs 25,000 from 18 per cent to 28 per cent in the previous meeting on October 19.

(With inputs from PTI)