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In a major tax update, the Central Government is set to revise GST cess rates on high-value and sin goods, including tobacco products, alcoholic beverages, and luxury vehicles. The move is aimed at boosting revenue while discouraging non-essential and health-harming consumption.
🔍 What Is GST Cess?
The GST compensation cess is an additional tax levied on specific goods and services, primarily to fund compensation to states for revenue loss post-GST implementation. While it was earlier limited, the government is now broadening its scope in Budget 2025.
🚬🥃🚗 Items That May Become Costlier
1. Tobacco Products
Cigarettes, chewing tobacco, and related products
Expected cess hike: Rs 5–Rs 10 per pack or unit
Justification: Public health concerns and rising healthcare costs
2. Liquor and Alcoholic Beverages
Country liquor, IMFL, imported spirits
May attract higher state excise + GST cess
Aim: To reduce excessive alcohol consumption
3. Luxury and Sports Cars
Premium sedans, SUVs, and imported vehicles
Cess slab likely to move from 22% to 25–28%
Focus: Increase tax on ultra-luxury segment without impacting common mobility
📈 Why Is This Cess Being Revisited?
Revenue generation for state compensation fund
Curbing lifestyle diseases and substance abuse
Targeting luxury consumption over essentials
Funding infrastructure and welfare schemes in Budget FY25–26
📌 FAQs
Q1. Will this cess affect middle-class consumers?
A: Not directly. The cess targets non-essential goods like tobacco, liquor, and luxury vehicles—not everyday items.
Q2. Is GST applicable on liquor in India?
A: Liquor for human consumption is exempt from GST, but a cess or additional state taxes may apply.
Q3. When will the new GST cess be implemented?
A: Announcements are expected in Budget 2025 or during the next GST Council meeting.
Q4. How much revenue does the GST cess generate?
A: Cess on sin goods contributes significantly—tobacco alone accounts for over ₹50,000 crore annually.
Q5. Will electric luxury vehicles be exempted?
A: EVs may still enjoy lower tax rates, but high-end imported EVs could fall under the new cess.
📊 Conclusion
The new GST cess is designed to balance revenue generation with responsible consumption. If approved, consumers can expect a rise in prices of tobacco, alcohol, and high-end automobiles—making luxury and indulgence costlier in 2025.
published on 2nd july
Publisher : SMITA
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