The GST rate on sin goods, including aerated drinks, cigarettes, tobacco and related items, is set to jump from 28 per cent to 35 per cent.
"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 (Group of Ministers)," said an official.
The proposed tax rate adjustments will extend beyond sin goods to include other categories as well.
For instance, the GoM led by Bihar Deputy Chief Minister Samrat Chaudhary, also approved changes to apparel tax rates.
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.
The GoM on rate rationalisation is reportedly planning to recommend tax adjustments for 148 items to the GST Council, with an official noting a "positive net revenue impact."
The GST Council, led by the Union Finance Minister and her state counterparts, will be reviewing the GoM's report on December 21, where final decisions on rate changes will be made.
Which Items Could Face GST Hikes?
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.
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 per 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)
