GoM proposes hike in GST on aerated drinks, cigarettes & tobacco to 35%
A specific rate of 35% might be set aside for demerit (sin) commodities such as aerated drinks, cigarettes, tobacco, and associated products. Seven years after its original implementation, this would be the first significant reorganization of tax rates under the commodities and services Tax (GST).
In addition to suggesting rate adjustments for more than 148 goods, including ready-made clothing, the Group of Ministers (GoM) on rate rationalization concluded its report with this special rate suggestion at a meeting on Monday, ahead of the GST Council meeting on december 21.
According to authorities, the Center and the states could offset the loss from other rate reductions for everyday products by raising the GST rates on sin goods from the present maximum slab of 28%. According to a state finance minister, the present four-slab GST structure—which is 5%, 12%, 18%, and 28%—will remain in place for the medium term.
In addition, the GoM, led by bihar Deputy chief minister Samrat Choudhary, has proposed a 5 percent GST charge on ready-made clothing up to Rs 1,500, an 18 percent rate for clothing between Rs 1,500 and Rs 10,000, and a 28 percent fee for clothing beyond Rs 10,000.
The main proposal of GST on life and health insurance premiums will be discussed at the GST Council's december 21 meeting in Jaisalmer. Senior citizens' health insurance premiums and everyone's term life insurance premiums are probably excluded. For other people, health insurance coverage up to Rs 5 lakh is probably excluded, and for health insurance coverage exceeding Rs 5 lakh, the current rate of 18% will be applied.
During its october meeting, the GoM proposed a revision to the GST rates for several items, including packaged water exceeding 20 liters (5 percent from 18 percent), bicycles under Rs 10,000 (5 percent from 12 percent), and exercise notebooks (5 percent from 12 percent). Shoes that cost more than Rs 15,000 and wristwatches that cost more than Rs 25,000 are probably going to be moved from the 18% GST slab to the highest slab of 28%.
In a separate meeting on Monday, the GoM on compensation cess, led by State Finance minister Pankaj Chaudhary, requested a six-month delay to present its report to the GST Council. The deadline for this GoM's report submission was december 31. The members of this GoM are from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, tamil Nadu, Uttar Pradesh, and West Bengal.
The GoM is investigating the legal ramifications of eliminating the cess, which is now paid at the highest rate of 28% on sin and luxury items like automobiles and tobacco. "A decision respecting the cess levy can be made until march 2026. Therefore, a thorough discussion was deemed necessary, and further time will be requested for the report's submission," the minister stated.
In addition to suggesting rate adjustments for more than 148 goods, including ready-made clothing, the Group of Ministers (GoM) on rate rationalization concluded its report with this special rate suggestion at a meeting on Monday, ahead of the GST Council meeting on december 21.
According to authorities, the Center and the states could offset the loss from other rate reductions for everyday products by raising the GST rates on sin goods from the present maximum slab of 28%. According to a state finance minister, the present four-slab GST structure—which is 5%, 12%, 18%, and 28%—will remain in place for the medium term.
In addition, the GoM, led by bihar Deputy chief minister Samrat Choudhary, has proposed a 5 percent GST charge on ready-made clothing up to Rs 1,500, an 18 percent rate for clothing between Rs 1,500 and Rs 10,000, and a 28 percent fee for clothing beyond Rs 10,000.
The main proposal of GST on life and health insurance premiums will be discussed at the GST Council's december 21 meeting in Jaisalmer. Senior citizens' health insurance premiums and everyone's term life insurance premiums are probably excluded. For other people, health insurance coverage up to Rs 5 lakh is probably excluded, and for health insurance coverage exceeding Rs 5 lakh, the current rate of 18% will be applied.
During its october meeting, the GoM proposed a revision to the GST rates for several items, including packaged water exceeding 20 liters (5 percent from 18 percent), bicycles under Rs 10,000 (5 percent from 12 percent), and exercise notebooks (5 percent from 12 percent). Shoes that cost more than Rs 15,000 and wristwatches that cost more than Rs 25,000 are probably going to be moved from the 18% GST slab to the highest slab of 28%.
In a separate meeting on Monday, the GoM on compensation cess, led by State Finance minister Pankaj Chaudhary, requested a six-month delay to present its report to the GST Council. The deadline for this GoM's report submission was december 31. The members of this GoM are from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, tamil Nadu, Uttar Pradesh, and West Bengal.
The GoM is investigating the legal ramifications of eliminating the cess, which is now paid at the highest rate of 28% on sin and luxury items like automobiles and tobacco. "A decision respecting the cess levy can be made until march 2026. Therefore, a thorough discussion was deemed necessary, and further time will be requested for the report's submission," the minister stated.