The GoM on GST rate rationalization voted on Monday to increase the tax on sin goods such as aerated drinks, cigarettes, tobacco, and associated products to 35% from the current 28%, according to an official.
The Group of Ministers (GoM) on Rate Rationalization, led by Bihar Deputy Chief Minister Samrat Chaudhary, has voted to lower garment tax rates.
As per the decision, readymade garments costing up to ₹ 1,500 would attract 5 per cent GST, those between ₹ 1,500 and ₹ 10,000 would attract 18 per cent. Garments costing above ₹ 10,000 would attract 28 per cent tax.
In total, the GoM on rate rationalisation will propose tax rate tweaks on 148 items to the GST Council. “The net revenue impact will be positive,” an official said.
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, basic commodities are either excluded or taxed at the lowest slab, whereas luxury and detriment items are charged at the highest slab. Luxury items such as cars and washing machines, as well as depreciating items such as aerated water and tobacco products, are subject to a cess on top of the maximum 28% rate.
The source stated that the GoM on rate rationalization completed its report on Monday, which would be presented to the council.
The council will now consider if there is further room for rate rationalization and whether to keep the GoM in place so that the rationalization procedure may be repeated on a regular basis, the official said.
| Item | Current GST Rate | Proposed GST Rate |
|---|---|---|
| Packaged Drinking Water (20L+) | 18% | 5% |
| Bicycles (Costing < ₹10,000) | 12% | 5% |
| Exercise Notebooks | 12% | 5% |
| Shoes (Costing > ₹15,000/pair) | 18% | 28% |
| Wrist Watches (Costing > ₹25,000) | 18% | 28% |
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Source: NDTV
