onsumers may soon have to shell out more for sin products like tobacco, cigarettes, and aerated drinks. While the government has already fixed a 40% GST on these items under the new GST reforms, reports now suggest that an additional levy could be imposed, making them even more expensive.
According to a report by Business Today, the government is considering imposing an extra cess on harmful products such as tobacco and cigarettes, over and above the 40% GST. The move is aimed at ensuring that the tax impact on these products remains at current levels.
Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal said that under GST law, the maximum rate of 40% can be applied. To maintain the present tax burden, the government may explore additional measures, including a cess. However, he did not provide specific details on the mechanism.
In an interview with Business Today, Agarwal also clarified that if legislative amendments are required, the government will consider them.
No Extra Tax on Luxury Cars, Bikes
Agarwal stressed that luxury cars, premium bikes, and other super-luxury items will not face any additional levies. These items will only attract the 40% GST rate.
Under the revised GST structure, harmful goods and super-luxury items will face 40% GST instead of the earlier 28%. He also mentioned that the existing 28% compensation cess on such products is expected to continue until December 2025, contrary to earlier expectations that it would end by October this year.
New GST Rates from September 22
The CBIC is currently working to implement the revised tax rates from September 22. Agarwal explained that two key processes are underway.
First, the necessary notifications must be issued by both the Centre and the states. He assured that this will be completed soon.
Second, technical upgrades are being made to the GST IT system to accommodate changes in tax rates, simplify registration, and streamline the refund process.
Industries, he said, will also be required to update their ERP systems with the new rates by September 22 to ensure that invoicing is carried out correctly.
