The government may hike GST rates on cigarettes, soft drinks, and luxury cars as it plans to replace the compensation cess with a new health and green cess. A simplified GST structure with revised slabs is also under discussion as part of broader GST 2.0 reforms.
The Goods and Services Tax (GST) rates on items like cigarettes, carbonated drinks, and high-end cars may go up soon, as per a report by NDTV. According to government sources cited by NDTV Profit, the center is considering replacing the current compensation cess with a new health and green cess.
At present, these products fall under the highest GST bracket of 28 per cent and also attract a compensation cess. This additional levy was introduced in 2017 to make up for the revenue states lost due to the shift to GST.
Compensation cess ends in 2026
The compensation cess is scheduled to end on March 31, 2026. A Group of Ministers (GoM), led by Minister of State for Finance Pankaj Chaudhary, is now reviewing what should replace it. The panel is exploring the idea of a new cess focused on health and environmental concerns, writes NDTV Profit, citing its sources.
New GST structure under discussion
In addition to cess changes, the government is also looking at a major revamp of the GST rate structure. According to NDTV Proft sources, the GST council is thinking of moving to a simpler three-rate system by scrapping the 12 per cent slab.
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If this happens, several items, including some food products, may be shifted to the 5 per cent slab. Others could move to the 18 per cent bracket. The GST Council is likely to discuss the proposal in its upcoming meeting.
Conclusion
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