Sentinel Digital Desk
The Goods and Services Tax (GST) is set for its first major revamp since its introduction seven years ago. A new special tax rate of 35% has been proposed for sin goods like aerated beverages, cigarettes, and tobacco products.
The Group of Ministers (GoM) on rate rationalization, ahead of the December 21 GST Council meeting, finalized its report recommending the hike. This move aims to compensate for revenue losses from potential tax cuts on essential items.
Despite these changes, the current four-slab GST structure — 5%, 12%, 18%, and 28% — will remain in place for the medium term. The 35% rate would specifically target luxury and demerit goods.
In addition to sin goods, the GoM has proposed higher taxes on luxury items such as cosmetics, watches, and high-end shoes. This shift ties taxation more closely to the pricing of products, increasing tax incidence on high-end purchases.
The council will also consider exempting GST on health insurance premiums for senior citizens and term life insurance premiums for all. Health insurance up to Rs 5 lakh may also be exempted, while policies exceeding this will attract an 18% tax.
The GST Council will meet in Jaisalmer on December 21 to review these proposals. If approved, the changes could mark a significant evolution in India’s indirect tax regime, balancing revenue generation and affordability.