Now, Indian People may have to spend more on cigarettes, tobacco products, and certain beverages as their prices are set to rise. This increase might even encourage reduced consumption, helping you save money and improve your health. The Government of India plans to impose higher taxes on these products by raising the current GST rate from 28% to 35%. This proposal has been put forward by the cabinet group tasked with improving the GST structure.
Companies will have to increase prices
If the proposal given by the cabinet group is implemented, then companies will be forced to increase the prices of cigarettes and tobacco products. Currently, 28 percent GST is levied on cigarettes and an additional tax of 5 percent to 36 percent is levied depending on the length. Apart from this, more tax can also be levied on luxury goods like cars and washing machines. Due to this, common people will have to spend more on these goods.
The government’s step is in the direction of increasing revenue
On the one hand, this proposal of the cabinet group is to increase the treasury by improving the tax structure of the government, it is also to get rid of unwanted substances that are harming people’s health. The government is avoiding increasing GST on commonly used consumer goods as part of reforming the tax structure to fill the treasury. This may lead to opposition. At the same time, increasing taxes on products that harm health will not hurt public sentiments.
Shares of Several Companies Decline
If the cabinet group’s proposal is approved, tobacco product manufacturers will be forced to raise prices, potentially impacting their earnings. Companies will also need to revamp their marketing strategies. These investor concerns have led to a decline of up to 3% in the shares of such companies, affecting major players like ITC, VST Industries, and Godfrey Phillips.
GST Update Highlights At a Glance
- Sin Goods: GST rate increased to 35%.
- Garments:
- 5% GST for items priced up to ₹1,500.
- 18% GST for items priced between ₹1,500–₹10,000.
- 28% GST for items priced above ₹10,000.
- Luxury Items: GST rate hike varies based on price.
- Insurance:
- No GST for senior citizens and coverage up to ₹5 lakh.
- 18% GST on coverage above ₹5 lakh.
- Luxury Goods:
- Shoes priced above ₹15,000 and watches above ₹25,000 may shift to the 28% GST slab.