GST: New tax slab proposed for cigarette-tobacco, harmful beverage products

New Delhi| The Group of Ministers (GoM), which decides tax on different things in the Goods and Services Tax (GST) system, held a meeting. It was decided that tax on goods harmful to the society would be increased. In view of this, it has been decided to impose 35 percent tax on cigarettes, tobacco, cold drinks and other carbonated drinks and products related to them. Right now the tax rate on these products is fixed at 28 per cent.

The group of ministers led by Bihar Deputy Chief Minister Samrat Chaudhary decided on rationalization of tax rates on clothes. Under this, readymade garments up to Rs 1500 will be taxed at 5 per cent, while garments between 1500 and 10 thousand will be taxed at 18 per cent and garments above 10,000 at 28 per cent.

It has been told that the Group of Ministers will submit a proposal to change the tax on 148 items to the GST Council. This is expected to have a positive impact on total revenue. The system of four-tier tax slabs of 5, 12, 18 and 28 per cent will continue, an official said. However, the Group of Ministers has proposed a new rate of 35 per cent this time.

The report of the Group of Ministers is expected to be discussed at the GST Council meeting on 21 December. The council will be chaired by Union Finance Minister Nirmala Sitharaman and will also include finance ministers of states. The final decision on change in GST rate will be taken by the GST Council only.

Meanwhile, the GOM constituted on GST Compensation Cess has decided to demand about six more months’ time from the GST Council to submit its report. The group was to submit its report to the GST Council by 31 December. This GOM was formed under the leadership of Minister of State for Finance Pankaj Chaudhary. It includes members from Assam, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal.