Centre proposes new GST rates of 5%, 18%; cigarettes to attract 40% tax under revamped regime
GST reforms: Indian government on Friday, 15 August 2025, proposed that the new GST rates should be at 5% and 18% while also highlighting that the revamped indirect tax regime will attract a 40% tax for cigarettes and other tobacco products, reported the news agency PTI, citing officials aware of the development on Friday, 15 August 2025.
The agency report also mentions that 99% of the items which are currently falling under the 12% tax bracket are proposed to be shifted to the 5% tax slab in the revamped structure.
According to the agency report, nearly 90% of the taxable items which are currently in the highest GST bracket of 28% are proposed to be shifted to the 18% tax slab.
India expects that the GST reforms will give consumption a big boost in the economy, which will in turn offset the revenue loss due to the rate rationalisation, reported the agency citing the people aware of the development.
Mint reported separately that the centre has also proposed to scrap the existing 12% and 28% GST slabs to finalise only two rate structures in the nation's indirect tax regime.
In addition to the 40% GST on tobacco products like cigarettes, sin goods, and luxury goods will also attract a tax rate of 40%, while the GST rates on daily use items are set to be 5%. However, petroleum products will continue to remain outside the upcoming revamped GST regime.
Total incidence of taxation to remain at the current level of 88%, according to the agency report.
