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‘Sin goods’ or ‘demerit goods’ are items deemed harmful to health or society and are taxed at the highest rate
A special 40 percent slab has been proposed for a select few items such as high-end cars, tobacco and cigarettes. (Image for representation)
The all-powerful GST Council on Wednesday approved a complete overhaul of the tangled Goods and Services Tax regime.
As part of this reform, a special 40 percent slab has been proposed for a select few items such as high-end cars, tobacco and cigarettes – often referred to as “sin goods” or “demerit goods”.
When it comes to GST, ‘sin goods’ comprise SUVs, tobacco, carbonated drinks, online gambling and gaming, luxury or harmful items that are subject to the highest tax plus cess. This is to reduce the negative social or health impact in India from the use of these products.
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Sin goods under GST include tobacco, pan masala, gutkha, cigarettes, luxury cars, online gambling or gaming, caffeinated beverages, coal, lignite, peat, and aerated drinks.
Due to social or health concerns, these products attract the highest tax, which has been increased from 28 to 40 percent.
In addition to GST, these goods also attract a compensation cess, meant to curb consumption and boost revenue. For instance, for now, chewing tobacco attracts a 96 percent cess.
Alcohol remains outside GST ambit and continues to be separately taxed by states through excise duties.
Finance Minister Nirmala Sitharaman said tobacco, gutkha, tobacco products and cigarettes will continue to be charged at current 28 percent plus a compensation cess till such time that loans taken to pay states for revenue loss is fully paid back. It has been decided that the GST will be levied on retail sale price (RSP) instead of transaction value on pan masala, gutkha, cigarettes, unmanufactured tobacco, chewing tobacco like zarda.
Here are the items in the ‘40% club’:
- Pan masala: 28% to 40%
- All goods (including aerated waters), containing added sugar or other sweetening matter or flavoured: 28% to 40%
- Other non-alcoholic beverages: 18% to 40%
- Carbonated beverages of fruit drink or carbonated beverages with fruit juice: 28% to 40%
- Caffeinated beverages: 28% to 40%
- Unmanufactured tobacco; tobacco refuse (other than tobacco leaves): 28% to 40%
- Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes: 28% to 40%
- Other manufactured tobacco and manufactured tobacco substitutes; “homogenised” or “reconstituted” tobacco; tobacco extracts and essences: 28% t0 40%
- Products containing tobacco or reconstituted tobacco and intended for inhalation without combustion: 28% to 40%
- Products containing tobacco or nicotine substitutes and intended for inhalation without combustion: 28% to 40%
- Motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars. This category does not include motor vehicles for the transport of 10 or more persons, including driver; LPG or CNG motor vehicles of engine capacity not exceeding 1200cc and of length not exceeding 4000 mm; diesel motor vehicles exceeding 1500 cc and 4000 mm; motor vehicles cleared as ambulances; three-wheelers; motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion not exceeding 1200cc and 4000 mm; and motor vehicles with both compression-ignition internal combustion piston engine (diesel or semi-diesel) and electric motor as motors for propulsion not exceeding 1500 cc and 4000 mm: 28% to 40%
- Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or 4000 mm: 28% to 40%
- Motor vehicles with both compression-ignition internal combustion piston engine (diesel-or semi diesel) and electric motor as motors for propulsion exceeding 1500cc or 4000 mm: 28% to 40%
- Motor cycles of engine capacity exceeding 350 cc: 28% to 40%
- Aircraft for personal use: 28% to 40%
- Yacht and other vessels for pleasure or sports: 28% to 40%
- Revolvers and pistols: 28% to 40%
- Smoking pipes (including pipe bowls) and cigar or cigarette holders, and parts thereof: 28% to 40%
Oindrila Mukherjee is a senior sub-editor who works for the rewrite and breaking news desks. Her nine years of experience in print and digital journalism range from editing and reporting to writing impactful st…Read More
Oindrila Mukherjee is a senior sub-editor who works for the rewrite and breaking news desks. Her nine years of experience in print and digital journalism range from editing and reporting to writing impactful st… Read More
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