GST rate rationalisation: Govt unlikely to bring 35% slab, may cut taxes on essentials: Sources
With all eyes on the GST rate rationalisation exercise, which aims to ease the tax burden on the common man, CNBC-TV18 has learnt from sources that the government is not in favour of introducing a new "special rate" slab of 35%, as proposed by the Group of Ministers (GoM) on GST rates.
The GoM had proposed a 35% GST rate for tobacco and aerated beverages, sources said. Currently, most tobacco products attract a 28% GST, except for tobacco leaves, which are taxed at 5% under the reverse charge mechanism, shifting the tax liability to the buyer instead of the supplier.
Additionally, a steep compensation cess is levied on tobacco products over and above the 28% GST, making them one of the most heavily taxed items under the regime. The cess rates on tobacco range from 11% to a staggering 290%.
Similarly, carbonated and aerated beverages fall under the highest GST slab of 28%, along with an additional 12% compensation cess, irrespective of sugar or fruit content.
Additionally, sources said, “The government is also not in favour of the GoM’s proposal to have separate rates for items based on prices, such as hiking GST on luxury watches, handbags, clothes, and other high-end goods, as it believes this could complicate compliance.”
