The Group of Ministers (GoM) on Rate Rationalisation, which convened yesterday for the third time since its formation, has proposed a “different tax treatment” for sin goods such as cigarettes, tobacco, and pan masala, according to finance ministry sources.
However, the final decision rests with the council, which is slated to meet in the third week of December in Jaisalmer.
This consideration follows a mid-July recommendation by the Fitment Committee to refer the matter to the GoM. The Fitment Committee had proposed notifying a maximum tax rate of 20% under the Central GST (CGST) and State GST (SGST) Acts for tobacco products, including cigarettes, bidis, smokeless tobacco, and a few other sin goods.
Sin goods under GST include products considered harmful or undesirable, often taxed to discourage consumption or increase revenue.
These include cigarettes, other tobacco products, carbonated drinks, high-end automobiles, and pan masala. Currently, they fall under the 28% GST slab, with an additional compensation cess ranging from 11% to 290%, set to expire in March 2026.
The GoM has also discussed merging GST slabs, evaluating three potential options for a three-slab rate structure. However, sources indicate it was deemed premature to recommend changes to the existing slabs.
Additionally, the GoM has suggested increasing GST rates on luxury items like high-end wristwatches and shoes while recommending reduced GST rates for essential products such as bicycles, exercise books, and large packs of packaged drinking water to improve affordability.
The GoM on Rate Rationalisation is chaired by Bihar Deputy Chief Minister Samrat Choudhary and includes six members: Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Services Minister Gajendra Singh, Karnataka Revenue Minister Krishna Byre Gowda, West Bengal Finance Minister Chandrima Bhattacharya, and Kerala Finance Minister KN Balagopal.