Will Luxury & Sin Goods See A Tax Hike In December, 35% GST On Tobacco, Aerated Drinks?

The Group of Ministers (GoM) on Rate Rationalisation, has proposed a “different tax treatment” for sin goods such as cigarettes, tobacco, and pan masala, according to finance ministry sources. Sources Say GoM proposes a hike in GST on aerated drinks, cigarettes & tobacco to 35-40%. 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.