Tue Dec 03 08:45:51 UTC 2024: **GST on Sin Goods to Jump to 35% in India: Tobacco Stocks Tumble**

**Jaisalmer, India** – A proposed increase in the Goods and Services Tax (GST) on “sin goods” is sending ripples through the Indian tobacco industry. A Group of Ministers (GOM) has recommended raising the GST rate on cigarettes, tobacco, aerated drinks, and related products from 28% to 35%. This announcement triggered a significant drop in the share prices of major tobacco companies, including ITC (-3%), VST Industries (-2.3%), and Godfrey Phillips (-3.2%), on Tuesday.

The GOM, chaired by Bihar’s Deputy Chief Minister, finalized the proposal as part of broader GST rate rationalization aimed at simplifying the tax structure and increasing revenue. The 35% rate will be a new addition to the existing four-tier GST slab (5%, 12%, 18%, and 28%). The GOM also suggested changes to apparel taxation, setting rates of 5% for garments under Rs 1,500, 18% for those between Rs 1,500 and Rs 10,000, and 28% for apparel costing over Rs 10,000. In total, the GOM proposed changes for 148 items.

These recommendations will be presented to the 55th GST Council meeting on December 21st in Jaisalmer, where the final decision will be made by Union Finance Minister Nirmala Sitharaman and state finance ministers. While the GOM previously proposed GST rate reductions for certain products in October, this latest proposal marks a significant increase for a range of goods deemed luxury or demerit items. The increased tax on tobacco products reflects the government’s strategy to discourage consumption of such goods through higher taxation.

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