GST 2.0: From high-end cars, tobacco to cigarettes — List of sin goods in 40% tax slab

Union Finance Minister Nirmala Sitharaman addresses the media regarding the 56th GST Council meeting

The 56th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, announced that a 40 percent GST tax slab has been proposed for a few items like high-end cars, tobacco and cigarettes – that are often referred to as “sin goods” or “demerit goods”.

The decision was taken in the meeting on Wednesday to cut down the negative social or health impact from the use of these products in the country.

As far as GST is concerned, ‘sin goods’ pertain to Sports Utility Vehicles (SUVs), tobacco, carbonated drinks, online gambling and gaming, luxury or harmful items that are subject to the highest tax plus cess.

Sin goods under GST include tobacco, pan masala, gutkha, cigarettes, luxury cars, online gambling or gaming, caffeinated beverages, coal, lignite, peat, and aerated drinks.

These tax slabs on these products has been raised from 28 to 40 percent, she said.

Additionally, these 'sin goods' also attract a compensation cess — aimed at curbing consumption and boost revenue.

As of now, alcohol remains outside the ambit of GST and continues to be separately taxed by states through excise duties.

Finance Minister stated that tobacco, gutkha, tobacco products and cigarettes will continue to be charged at current 28 percent plus a compensation cess till such time that loans taken to pay states for revenue loss is fully paid back.

She informed that GST will be levied on retail sale price (RSP) instead of transaction value on pan masala, gutkha, cigarettes, unmanufactured tobacco, chewing tobacco like zarda.

Items falling in the 40 percent GST slab:

-- Pan masala: 28 percent to 40 percent

-- All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured: 28 percent to 40 percent

-- Other non-alcoholic beverages: 18 percent to 40 percent

-- Carbonated beverages of fruit drink or carbonated beverages with fruit juice: 28 percent to 40 percent

-- Caffeinated beverages: 28 percent to 40 percent

-- Unmanufactured tobacco; tobacco refuse (other than tobacco leaves): 28 percent to 40 percent

-- Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes: 28 percent to 40 percent

-- Other manufactured tobacco and manufactured tobacco substitutes; “homogenised” or “reconstituted” tobacco; tobacco extracts and essences: 28 percent to 40 percent

-- Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion: 28 percent to 40 percent

-- Products containing tobacco or nicotine substitutes and intended for inhalation without combustion: 28 percent to 40 percent

-- Motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars. This category does not include motor vehicles for the transport of 10 or more persons, including driver; LPG or CNG motor vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm; diesel motor vehicles exceeding 1500 cc and 4000 mm; motor vehicles cleared as ambulances; three-wheelers; motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion not exceeding 1200cc and 4000 mm; and motor vehicles with both compression-ignition internal combustion piston engine (diesel or semi-diesel) and electric motor as motors for propulsion not exceeding 1500 cc and 4000 mm: 28 percent to 40 percent

-- Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or 4000 mm: 28 percent to 40 percent

-- Motor vehicles with both compression-ignition internal combustion piston engine (diesel-or semi diesel) and electric motor as motors for propulsion exceeding 1500cc or 4000 mm: 28 percent to 40 percent

-- Motor cycles of engine capacity exceeding 350 cc: 28 percent to 40 percent

-- Aircraft for personal use: 28 percent to 40 percent

-- Yacht and other vessels for pleasure or sports: 28 percent to 40 percent

-- Revolvers and pistols, other than those of heading 9303 or 9304: 28 percent to 40 percent

-- Smoking pipes (including pipe bowls) and cigar or cigarette holders, and parts thereof: 28 percent to 40 percent