GST on Sin and Luxury Goods Likely to Increase

1. GST Slab Revision Proposed

The government is planning to revise the GST slab structure.

The revision is not expected to increase the overall weighted average tax burden.

2. Demerit and Luxury Goods in Focus

The proposal targets "demerit and luxury goods", such as:

Tobacco products

Aerated (soft) drinks

Cars

3. Current Compensation Cess to Be Removed

The compensation cess currently levied on these goods will likely be removed from FY27 (Financial Year 2026–27).

4. New Cesses Under Consideration

After compensation cess is removed, new levies may be introduced, such as:

Health Cess

Clean Energy Cess

These new imposts would apply to the same category of goods.

5. Possible GST Rate Hike

Officials are considering raising the GST rate on these goods from the current 26%.

The hike would be within the legal GST rate cap of 40% as mandated by the GST Act.