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 ₹1,500 would attract 5 per cent GST, those between ₹1,500 and ₹10,000 would attract 18 per cent. Garments costing above ₹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.
Cess panel
The group of ministers (GoM) on GST compensation cess, under Minister of State for Finance Pankaj Chaudhary, on Monday, decided to seek about a 6-month extension from GST council for submission of report, an official said. They were due to submit the report on December 31.
“The GoM decided that there are many legal issues involved in the compensation cess matter and different facets of law have to be discussed threadbare, which would take time. It was decided to seek extension of time for submission of report to the council,” the official said.
