Cigarettes, Cold Drinks, Big Cars And Bikes: 40% GST For Sin, Super Luxury Items

The GST Council has increased the tax on sin and super luxury goods under a special rate of 40 per cent. The tax on pan masala, tobacco products, cigarettes and all automobiles above 1,200 cc and longer than 4,000 mm will attract 40 per cent GST. Motorcycles exceeding 350 cc, yachts and aircraft for personal use, and racing cars will attract a 40 per cent levy.

All cars larger than 1,200 cc for petrol and 1,500 cc for diesel will be charged at 40 pc, Finance Minister Nirmala Sitharaman said.

The council has also raised the tax rate on aerated drinks containing added sugar and caffeinated and non-alcoholic beverages has been increased from 28 per cent to a steep 40 per cent. 

The council, chaired by Ms Sitharaman, cut the current four slabs down to two, in a landmark move. It scrapped the 12 per cent and 28 per cent rates, while retaining the 5 per cent and 18 per cent slabs. The new goods and services tax (GST), except for tobacco products and cigarettes, will become effective from September 22.

Read | GST Rates Revised: What Gets Cheaper

The government has decided to cut taxes on hundreds of consumer items ranging from soaps to small cars, with a "focus on the common man".

Praising the announcement, Prime Minister Narendra Modi said, "GST reforms will improve lives, ensure ease of doing business, especially for small businesses".

The move to simplify the tax regime - first announced by Prime Minister Narendra Modi in his Independence Day speech - comes as India's exports to the US face a 50 per cent tariff - the highest in the world.