The Group of Ministers (GoM) has restructured the Goods and Services Tax rates in sin goods like Cigarettes, tobacco products, and aerated beverages are increased to 35% from 28%. This is a major change in tax rates under GST in seven years. This decision was finalised in Monday’s meeting which was chaired by Bihar Deputy CM Samrat Chaudhary.
35% GST on Sin Goods like Cigarettes and Tobacco Products
Presently GST has four main tax slabs 5%, 12%, 18%, and 28% but to demotivate people from using sin goods the GoM has decided to increase the tax on Cigarettes, Tobacco Products, and aerated drinks.
GST rate will increase for Clothing
Not only sin goods but readymade garments will see a surge in GST. Cloths priced under Rs 1500 will be taxed at 5% GST. But products worth more than Rs 1500 to Rs 10000 will be traced at 18% GST. And those products which cost more than Rs 10000 will be taxed at 28% GST. this will result in a positive revenue impact says an official.
GST on Cosmetics, Shoes and Watches
Apart from clothing cosmetics, shoes, and watches can also get expensive as a proposal of increasing GST has been given by the Group of Ministers in the meeting. But these products will also be taxed like clothing, meaning essential and low-price products will be charged less GST, and expensive or branded cosmetics, shoes, and watches will be taxed at higher GST rates.
Less GST on Drinking Water, Notebooks and Bicycles
The GoM has also proposed to lower the GST on packaged drinking water from 18% to 5%. Notebooks are currently taxed at 12%, but it is proposed to bring the tax slab down to 5%. Bicycles that cost less than Rs 10000 can have reduced GST from 12% to 5%.
GST on Insurance Premiums
One of the most significant decisions that will be taken is GST on Health and Life Insurance Premiums. Finance minister Nirmala Sitaraman gave indication that up to 5 Lakh worth of Insurance GST could be waived off and anything more than this will be charged accordingly.
