The Group of Ministers (GoM) on GST rate rationalisation has proposed increasing the tax on products like aerated beverages, cigarettes, and other tobacco-related items to 35%, up from the current 28%, according to a report by PTI. This recommendation is part of efforts to revise tax rates and boost revenue collection.
Proposed GST Rate Changes
The GoM, led by Bihar Deputy Chief Minister Samrat Choudhary, convened on Monday to finalise the adjustments. In addition to higher taxes on “sin goods,” discussions included changes to GST rates on apparel and other items.
Readymade Garments:
- Up to ₹1,500: Taxed at 5%.
- Between ₹1,500 and ₹10,000: Taxed at 18%.
- Above ₹10,000: Taxed at 28%.
The GoM has suggested revisions for 148 items overall, aiming for a positive revenue impact. Their report will be presented to the GST Council on December 21, 2024, for final approval.
Proposed New Tax Structure
A special GST rate of 35% for tobacco products and aerated beverages has been proposed, while the existing four-tier system (5%, 12%, 18%, and 28%) will remain intact.
Also Read- GST Council to Meet on Dec 21: Key Agenda Includes Insurance Levy, Tax Cuts
Current GST Framework
Under the GST system:
- Essential goods are exempt or taxed at the lowest rates.
- Luxury and demerit goods, such as cars, washing machines, aerated drinks, and tobacco products, are taxed at higher rates, with additional cess on some items.
The GoM’s recommendations will help the GST Council evaluate further rate rationalisation and possibly extend the GoM’s mandate for periodic reviews.
Previous Proposals by the GoM
In its October meeting, the GoM suggested the following changes:
- Packaged Drinking Water (20 litres and above): Reduce GST from 18% to 5%.
- Bicycles under ₹10,000: Reduce GST from 12% to 5%.
- Exercise Notebooks: Reduce GST from 12% to 5%.
- Shoes above ₹15,000: Increase GST from 18% to 28%.
- Wristwatches above ₹25,000: Increase GST from 18% to 28%.