GST Council Clears 40% Special Rate on Sin and Luxury Goods

New Delhi: In a major decision taken at the 56th GST Council meeting, Union Finance Minister Nirmala Sitharaman announced the approval of a special 40% Goods and Services Tax (GST) slab that will apply exclusively to products classified as sin and super luxury goods.

The Finance Minister clarified that while most goods continue to attract GST rates between 5% and 18%, the newly approved 40% bracket has been introduced specifically for harmful and luxury consumption categories.

The items falling under this category include paan masala, cigarettes, gutka, chewing tobacco, zarda, unmanufactured tobacco, and bidis. In addition, aerated drinks, flavoured or caffeinated carbonated beverages, sweetened carbonated fruit drinks, and non-alcoholic beverages (not already placed under existing concessional slabs) will also attract the higher tax rate.

“This special rate of 40% has been cleared to ensure that sin goods and certain luxury consumables are taxed in line with their social and health impact,” Sitharaman stated following the meeting.

The move is expected to not only boost government revenue but also act as a deterrent to the consumption of products deemed harmful to public health.