Additional levy over 40% on sin/de-merit goods proposed: West Bengal FM at GoM meet

West Bengal Finance Minister Chandrima Bhattacharya on Thursday said she has proposed an additional levy over 40% on sin and de-merit goods under the new GST system. “The sin goods that are currently paying GST beyond 40% should be taxed with an additional cess going forward too,” Bhattacharya said.

The government has announced plans to simplify GST by moving to only two slabs — 5% and 18% — for most goods, while luxury and “sin” goods will attract a special rate of 40%. The new structure is likely to be implemented by Diwali.

A crucial meeting of the Group of Ministers (GoM) of state finance ministers on GST rate rationalisation is currently underway. The six-member GoM, chaired by Bihar Deputy Chief Minister Samrat Choudhary, is reviewing the Centre’s proposal to cut down tax slabs to just 5% and 18%, and will forward its recommendations to the GST Council.

Members of the GoM include Uttar Pradesh Finance Minister Suresh Kumar Khanna, Rajasthan Health Minister Gajendra Singh, West Bengal Finance Minister Chandrima Bhattacharya, Karnataka Revenue Minister Krishna Byre Gowda and Kerala Finance Minister K N Balagopal.

Speaking on the sidelines of the meeting, Choudhary said: “All members put their word to the GoM in today’s meeting. We discussed the Centre’s proposal of a 2-slab system, ending the 12% and 28% slabs. We have taken note of the Centre’s proposal. The GST Council will take the final decision on this.”

UP Finance Minister Suresh Khanna welcomed the Centre’s decision, saying it would benefit the common man. “This decision will bring relief to the common man. High-end luxury cars and tobacco/gutka/pan masala will be counted under 40%. States understand that decisions may cause some revenue loss,” he said.

Finance Minister Nirmala Sitharaman on Wednesday told the Group of Ministers (GoMs) that rate rationalisation would bring relief to the common man, farmers, the middle class, and MSMEs, while creating a simplified, transparent, and growth-oriented GST framework.

Later in the day, the GoM on insurance met to discuss the Centre’s proposal to exempt GST on health and life insurance premiums for individuals. Though the move could result in a revenue loss of about ₹9,700 crore annually, most states supported it. They also emphasised the need for a mechanism to ensure that the tax cut directly benefits policyholders.

On Thursday, the GoM on rate rationalisation is set to deliberate on the Centre’s plan to classify goods and services into two categories — ‘merit’ and ‘standard’ — taxed at 5% and 18% respectively. Additionally, a special 40% rate has been proposed for 5–7 “sin goods.”

The proposal also seeks to eliminate the 12% and 28% slabs. As per the plan, nearly 99% of items under the 12% bracket would move to 5%, while about 90% of those taxed at 28% would shift to the 18% slab.