GoM wants 35% GST on tobacco, aerated drinks

The Group of Ministers (GoM) on the goods and services tax (GST) rate rationalisation has proposed a 'special rate' of 35% on several sin items such as tobacco, tobacco products and aerated beverages, sharply increasing the tax incidence on these products.

- FE BUREAU

This comes at a time when the Centre and states are looking for ways to boost GST collections.

Currently, assorted tobacco items, pan masala and aerated water are among those attracting the highest GST rate of 28%. Along with the 'compensation cess', the tax incidence comes to 40-80%, according to industry estimates. The higher tax rate would further increase the tax incidence on these items on which cess is levied ad valorem.

The GoM has also recommended cutting the GST for ready-made garments priced up to ₹1,500 to 5% from 12%; but for garments priced between ₹1,500 and ₹10,000, it has proposed to hike the GST to 18% from 12%. For garments above ₹10,000, the GoM has proposed to levy the highest GST slab, at 28%. At present, ready-made garments below ₹1,000 are taxed at 5%, while those above ₹1,000 are taxed at 12%.