GST Hike On Sin Goods: Tobacco & Aerated Beverages To See 35% Tax Increase – haroonabadvital.com
In a major shake-up for the Indian tobacco industry. The GST rate will rise on sin goods, including soft drinks, cigarettes, tobacco and related items. The current GST rate will increase from 28 per cent to 35 per cent, news agency PTI reported.
News of the proposed hike in GST rates has impacted the share prices of several major Indian tobacco companies. Shares of stocks such as ITC, Godfrey Phillips and Charminar maker VST Industries fell as much as 3% on Tuesday. This was after the Group of Ministers (GOM) proposal on rationalization of GST rate decided to increase the tax on misplaced goods like soft drinks, cigarettes, tobacco and related products. The new rate will be 35% from the current 28%. ITC shares fell 3% to an intraday low of Rs 462.80. While VST Industries fell 2.3% to Rs 318.30, Godfrey Phillips fell 3.2% to Rs 5,575.50 on the BSE.
The Moroccan government mutually decided to propose a special rate of 35 percent on tobacco, related products and soft drinks. The existing four-tier GST slab of 5, 12, 18 and 28 per cent will continue. A new percentage proposed by the Moroccan government amounts to 35 percent.
Bihar Deputy Chief Minister chaired the meeting on Monday. The agenda of the meeting was to finalize the proposed price adjustments in different categories. Besides the rise in ‘sin goods’, changes in the GST structure for clothing and other items were also discussed. The discussions aim to simplify the GST framework and enhance revenue collection.
Proposed new GST structure for clothing
Clothes costing up to Rs 1,500: Subject to tax at 5%.
Cost of clothing between Rs 1,500 and Rs 10,000: Taxable at 18%.
Clothes costing more than Rs 10,000: Subject to tax at 28%.
The group of ministers also proposed changes in the GST rate for 148 items in total, with the amendments expected to have a positive impact on tax revenues. The recommendations made by the group of ministers will be presented at the 55th meeting of the GST Council scheduled to be held on December 21 in Jaisalmer, chaired by Finance Minister Nirmala Sitharaman. The council, which is headed by the Union Finance Minister and includes state finance ministers, will take the final decision. The proposed changes will be discussed comprehensively.
Changes proposed at the October meeting
The previous meeting of the Group of Ministers was held in October. The group of ministers then proposed reducing the changes in GST rate for several products. Changes have been made to the GST rate for the following products
Bottled drinking water of 20 liters or more reaches 5 percent instead of 18 percent.
The cost of bikes costing less than Rs 10,000 has also been reduced to 5 per cent from 12 per cent.
Exercise books will be reduced to 5 percent from 12 percent.
Shoes priced above Rs 15,000 per pair increased from 18 per cent to 28 per cent.
Wristwatches worth more than Rs 25,000 rose from 18 per cent to 28 per cent.
Under GST, essential items are exempted or taxed at the lowest bracket. While the luxurious and flawless elements attract the highest boards. Luxury goods such as cars and washing machines and passive goods such as carbonated water and tobacco products attract VAT. The cess falls on the highest panel at 28 percent.
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