In a major shake-up for the Indian tobacco industry. The GST rate on sin goods, including aerated drinks, cigarettes, tobacco, and related items will increase. The existing GST rate will increase from 28 per cent to 35 per cent, reported by news agency PTI.
The news of a proposed hike in GST rates affected the Share price of several big Indian tobacco corporations. The shares of stock like ITC, Godfrey Phillips, and Charminar-maker VST Industries fell by up to 3% on Tuesday. This was after the proposal by Group of Ministers (GOM) on GST rate rationalization decided to hike the tax on sin goods like aerated beverages, cigarettes, tobacco, and related products. The New rate will be 35% from the current 28%. ITC shares dropped 3% to a day’s low of Rs 462.80. Whereas VST Industries shares declined 2.3% to Rs 318.30, and Godfrey Phillips fell 3.2% to Rs 5,575.50 on the BSE.
The GOM has mutually decided to propose a special rate of 35 per cent on tobacco and related products and aerated beverages. The existing four-tier GST tax slab of 5, 12, 18, and 28 per cent will continue. Whereas, a new rate of 35 per cent is proposed by the GOM.
Bihar Deputy Chief Minister led the meeting on Monday. The agenda of the meeting was to finalise the proposed rate adjustments in different categories. Alongside, the hike for “sin goods,” changes to the GST structure for apparel and other items were also discussed. The discussions were aimed at simplifying the GST framework and boosting revenue collection.
New Proposed GST Structure For Apparel
Apparels costing up to Rs 1,500: Taxed at 5%.
Apparel costing between Rs 1,500 and Rs 10,000: Taxed at 18%.
Apparels costing above Rs 10,000: Taxed at 28%.
The Group of Ministers has also proposed GST Tax rate changes for 148 items in total, with the expectation that the adjustments will have a positive impact on tax revenue. The recommendations made by the Group of Ministers(GOM) will be presented at the 55th GST Council meeting scheduled for December 21 in Jaisalmer, chaired by Finance Minister Nirmala Sitharaman. The council, chaired by the Union Finance Minister and including state finance ministers, will make the final decision. The proposed changes will be discussed thoroughly on the proposed changes.
Proposed Changes In October Meet
The previous meeting of Group of Ministers was held in the month of October. The Group of Ministers had then proposed reducing GST rate changes for several products. The GST rate changes were made for the following products
Packaged drinking water of 20 litres and above to 5 per cent from 18 per cent.
Bicycles costing less than Rs 10,000 were reduced furthermore to 5 per cent, from 12 per cent.
Exercise notebooks will be reduced to 5 per cent from 12 per cent.
Shoes above Rs 15,000 per pair increased from 18 per cent to 28 per cent.
Wristwatches above Rs 25,000 hiked from 18 per cent to 28 per cent.
Under GST, essential items are either exempted or taxed at the lowest slab. Whereas luxury and demerit items attract the highest slab. Luxury goods like car, washing machine and demerit goods like aerated water and tobacco products attract cess. The cess is on top of the highest 28 per cent slab.
