The Goods and Services Tax (GST) Council is reportedly considering a steep hike in GST rates on select products including cigarettes, carbonated beverages, and luxury vehicles.
The move is aimed at:
Curbing unhealthy consumption
Increasing tax revenue from non-essential or “sin” goods
Bringing tax parity across categories in the luxury and health-risk segments
🚭 What Could Be Impacted?
The revised tax slabs may affect:
| Product Category | Current GST | Proposed Changes |
|---|---|---|
| Cigarettes | 28% + cess | Higher cess likely |
| Carbonated drinks | 28% + 12% cess | Possible cess hike |
| Luxury cars (SUVs, sedans) | 28% + 15% cess | Additional cess possible |
| Tobacco products | Varies | Expected increase |
| Pan masala & gutkha | 28% + high cess | Further tightening |
🧾 Why the Increase?
To discourage consumption of harmful products like tobacco and sugary drinks
To ensure high-income groups contribute more via luxury goods
To fill revenue gaps in sectors where exemptions and rate cuts were recently offered
📌 When Will the Hike Be Announced?
The next GST Council meeting is expected to take place later this month. Final decisions may be announced after stakeholder consultations and economic impact analysis.
🔍 Expert View
Economists note that increasing GST on such goods:
Aligns with global best practices on taxing sin goods
Could create price shocks in the short term
May impact automobile sales in the luxury segment
📌 FAQs
Q1. Why is GST being increased on cigarettes and drinks?
A: To discourage harmful consumption and boost tax revenue from non-essential items.
Q2. How much more will consumers pay?
A: It depends on the final cess rate. Prices may rise by 5–15% depending on the product.
Q3. Will this affect middle-class consumers?
A: Mostly luxury goods and non-essential items are targeted, so the impact on essentials is minimal.
Q4. Has this type of hike happened before?
A: Yes, similar hikes on cigarettes and tobacco have occurred in past GST revisions.
Q5. What sectors will benefit or be hurt?
A: FMCG (beverages), automobile (luxury), and tobacco sectors may see cost increases; tax revenue is expected to rise.
published on 2nd july
Publisher : SMITA
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