High GST Slab of 35% May Be Introduced on Certain Products – Here’s the Latest

High GST Slab of 35% May Be Introduced on Certain Products – Here's the Latest

High GST Slab of 35% May Be Introduced on Certain Products – Here's the Latest

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Consumers in India might soon find themselves paying more for cigarettes, tobacco products, and certain drinks due to upcoming price hikes. This rise in costs could lead to lower consumption, allowing people to save money and enhance their health. The Indian government intends to increase taxes on these items by raising the existing GST rate from 28% to 35%. This suggestion has been made by the cabinet committee responsible for reforming the GST framework.

If the cabinet group’s proposal is put into action, companies will have to raise the prices of cigarettes and tobacco products. Currently, there is a 28 percent GST on cigarettes, along with an extra tax that ranges from 5 percent to 36 percent based on their length. Additionally, more taxes may be applied to luxury items such as cars and washing machines. As a result, ordinary consumers will end up spending more on these products.

The government’s move aims to boost revenue. While this cabinet group’s proposal seeks to enhance the government’s tax structure and increase treasury funds, it also targets the elimination of harmful substances affecting public health. To reform the tax structure without burdening consumers, the government is refraining from raising GST on everyday goods, which could lead to backlash. However, increasing taxes on health-harming products is less likely to provoke negative public sentiment.

Shares of Various Companies Drop

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If the cabinet group’s proposal is accepted, manufacturers of tobacco products will have to increase their prices, which could affect their profits. Additionally, these companies will need to change their marketing approaches. As a result of these investor worries, shares of these companies have fallen by as much as 3%, impacting major players such as ITC, VST Industries, and Godfrey Phillips.

GST Update Summary:

Sin Goods: The GST rate has been raised to 35%.

Garments:

5% GST for items costing up to ₹1,500.

18% GST for items priced between ₹1,500 and ₹10,000.

28% GST for items above ₹10,000.

Luxury Items: The GST increase varies depending on the price.

Insurance:

No GST for senior citizens with coverage up to ₹5 lakh.

18% GST for coverage exceeding ₹5 lakh.

Luxury Goods: Shoes priced over ₹15,000 and watches over ₹25,000 may be moved to the 28% GST category.

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