GST on cigarettes, tobacco, aerated beverages likely to be hiked, new 35% slab proposed: Here’s what we know

Tue Dec 03 07:08:48 UTC 2024: ## GST Hike on Sin Goods, Rate Changes for Apparel Proposed

**New Delhi, December 2, 2024** – A Group of Ministers (GoM) has proposed significant changes to India’s Goods and Services Tax (GST) rates, recommending a hike for certain products and adjustments for others. The recommendations, which will be presented to the GST Council on December 21st, include a substantial increase in the tax on aerated drinks, cigarettes, and tobacco products. The GoM proposes raising the GST rate on these items to 35 percent from the current 28 percent.

This new 35 percent rate would sit above the existing four-tier structure (5, 12, 18, and 28 percent). The GoM anticipates a positive net revenue impact from this change.

Further changes are proposed for apparel. Readymade garments costing up to ₹1,500 would be taxed at 5 percent GST, those between ₹1,500 and ₹10,000 at 18 percent, and garments above ₹10,000 at 28 percent. These changes affect 148 items in total.

The GoM, led by Bihar’s Deputy Chief Minister Samrat Chaudhary, finalized its report on Monday. The GST Council will have the final say on the proposed rate changes and will also determine if further rate rationalization is needed, potentially extending the GoM’s mandate. The council’s decision will impact a range of goods, from essential items to luxury and demerit goods, which currently attract the highest GST rates along with additional cess. Previous GoM proposals included reductions on certain items such as packaged drinking water and bicycles, and increases on shoes and wristwatches above certain price points.