Currently, GST is a four-tier tax structure with slabs at 5, 12, 18, and 28 per cent. (Representational)
New Delhi:
The GoM on GST rate rationalisation on Monday decided to hike tax on sin goods like aerated beverages, cigarettes, tobacco and related products to 35 per cent from the present 28 per cent, an official said.
The Group of Ministers (GoM) on rate rationalisation under Bihar Deputy Chief Minister Samrat Chaudhary also decided to rationalise tax rates on apparel.
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.
In total, the GoM on rate rationalisation will propose tax rate tweaks on 148 items to the GST Council. “The net revenue impact will be positive,” an official said.
The GoM report is expected to be discussed by the GST Council — chaired by Union Finance Minister and comprising her state counterparts — on December 21. A final decision on GST rate changes will be taken by the council.
“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,” said the official.
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.
The council will now decide whether there is further scope for rate rationalisation and may decide to retain the GoM so that the rationalisation exercise continues periodically, the official added.
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/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.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
