‘40% GST’ Trends On X! GST On Cigarettes, Alcohol, Gambling Surges

The 56th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, began in New Delhi on September 3. The meeting is scheduled for two days, from September 3 to 4. The Council focused on GST rate rationalisation, with key proposals to remove the 12% and 28% slabs.

The revised structure included new rates of 18% and 5%, with a 40% slab on sin goods. Officials discussed lowering tax burdens on essential goods while keeping high rates on harmful and luxury items. The meeting marked an important step in simplifying India’s indirect tax system.

GST Council Introduces 40% Slab for Sin Goods

The Council placed sin goods and luxury items under the 40% GST slab. Tobacco, gutka, pan masala, chewing tobacco, cigarettes, cigars, and nicotine substitutes attracted this highest rate, along with a cess up to 96% in some cases.

Sugar-sweetened drinks such as carbonated and caffeinated beverages moved from 28% to 40%, with an additional 12% cess on certain items. The Council also applied the 40% slab to lottery, casinos, and online gaming. Luxury vehicles like SUVs above 1,500cc engines and long vehicles now fall into the same bracket, along with a 22% compensation cess.

GST on Automobiles and Parts Fixed at 18%

The GST Council finalised an 18% slab for small cars, motorcycles up to 350cc, three-wheelers, buses, trucks, and ambulances. Auto parts across categories also fall under this rate. The decision brought uniformity across the automobile sector, replacing earlier slab differences. Finance Ministry officials confirmed that large electronic appliances, including some previously taxed at 28%, will now attract 18%.

The move aims to provide relief to buyers of smaller vehicles while keeping luxury vehicles in the 40% category. The Council said the changes ensure a fair balance between affordability and revenue generation.

GST Reduced to 5% on Fibres and Renewable Energy

The Council lowered GST to 5% on several key products. These included man-made fibre, yarn, fertiliser inputs, and renewable energy devices such as solar, wind, and biogas equipment. Officials said the reduction would encourage growth in agriculture and clean energy sectors. The decision also aimed at supporting India’s renewable energy targets.

 Fertiliser inputs under the 5% slab are expected to benefit farmers, while lower GST on yarn will aid the textile industry. Finance Minister Nirmala Sitharaman said the Council focused on cutting taxes in areas that directly impact production and daily use.

GST on Insurance Policies Reduced to Nil

The Council exempted all life and health insurance policies from GST. This includes term insurance, unit-linked insurance plans (ULIP), endowment policies, family health cover, and senior citizen plans. Reinsurance policies also moved to the nil tax category.

Officials confirmed that the move will directly reduce premium costs for policyholders. The Council said this decision would benefit families, senior citizens, and individuals seeking medical and life protection.

The exemption marked one of the most important announcements of the 56th meeting, as it linked taxation changes to health and financial security for citizens.

Processed Foods and Gambling Face Higher Tax Rates

The GST Council also considered health and lifestyle-related products while revising slabs. Processed junk foods with high salt, sugar, or trans fat content moved into the 40% category. Items such as packaged snacks and fast food will now face higher levies. Gambling, betting, and gaming activities will also remain under strict taxation, attracting the 40% slab.

Officials said these measures would act as both revenue sources and control mechanisms for harmful consumption. The Council’s decision kept public health in focus while ensuring that non-essential and high-risk activities remained heavily taxed.

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