The Goods and Services Tax (GST) Council’s sweeping reforms have not only lowered rates for several daily-use goods but also sharply increased taxes on luxury items, sin products, and select consumer categories. The Goods and Services Tax (GST) Council, at its 56th meeting chaired by Union Finance Minister Nirmala Sitharaman, has approved a dual tax structure of 5 per cent and 18 per cent which will come into effect from September 22.
Regarding the September 22 implementation, the finance minister remarked, “All this will be effective 22 September 2025, the first day of Navratri… The changes on GST of all products except sin goods, will be applicable 22 September… Sin goods will continue at the existing rates of the GST and compensation cess, where applicable, till the loan and interest payment obligations under the compensation cess account are completely discharged… The Union Finance Minister and the Chairperson of the GST Council is authorised to decide on the actual date of the transition for these tobacco related products as soon as the loan and interest is cleared.”
What Gets More Expensive
From high-end cars and motorcycles to tobacco and aerated drinks, here’s a look at what will cost more under the new structure.
1. Tobacco and Related Products
• Pan masala: Hiked from 28% to 40% (effective from a notified date, after loan and interest liability under compensation cess is discharged).
• Unmanufactured tobacco and tobacco refuse (except tobacco leaves): From 28% to 40%.
• Cigars, cheroots, cigarillos and cigarettes: From 28% to 40%.
• Other manufactured tobacco and substitutes (including reconstituted tobacco, extracts and essences): From 28% to 40%.
• Products containing tobacco/nicotine substitutes intended for inhalation without combustion: From 28% to 40%.
• Smoking pipes, cigar/cigarette holders and parts thereof: From 28% to 40%.
2. Sugary and Aerated Beverages
• All goods containing added sugar, flavouring, or sweetening matter (including aerated waters): From 28% to 40%.
• Other non-alcoholic beverages: From 18% to 40%.
• Carbonated fruit drinks and fruit juice-based beverages: From 28% to 40%.
• Caffeinated beverages: From 28% to 40%.
3. Luxury Automobiles, Motorcycles and Aircraft
• Passenger motor cars (excluding specific exemptions): From 28% to 40%.
• Hybrid cars with petrol engines above 1200cc or length beyond 4000 mm: From 28% to 40%.
• Diesel hybrid cars with engines above 1500cc or length beyond 4000 mm: From 28% to 40%.
• Motorcycles above 350cc engine capacity: From 28% to 40%.
• Aircraft for personal use: From 28% to 40%.
• Revolvers and pistols: From 28% to 40%.
4. Paper, Pulp and Printing Materials
GST on the following has been raised from 12% to 18%:
• Chemical wood pulp (dissolving grades).
• Uncoated writing/printing paper and board (excluding notebooks, graph books, laboratory books).
• Uncoated kraft paper and board.
• Greaseproof and glassine papers.
• Corrugated, creped, crinkled, embossed, or perforated papers.
• Composite papers and coated papers (with kaolin or inorganic substances).
5. Energy and Fuel
• Biodiesel (other than that supplied to oil companies for blending with diesel): From 12% to 18%.
• Goods used in petroleum and coal bed methane operations: From 12% to 18%.
6. Household and Textile Goods
• Odoriferous preparations used by burning (other than incense sticks and dhoop products): From 12% to 18%.
• Quilted textile products priced above ₹2,500 per piece: From 12% to 18%.
• Cotton quilts above ₹2,500 per piece: From 12% to 18%.
Meanwhile, for all specified actionable claims including betting, casinos, gambling, horse racing, lotteries and online money gaming, a GST rate of 40% will apply. Admission to sporting events like the IPL will attract 40% GST. However, this rate of 40% will not apply to admission to recognised sporting events.
Admission to other sporting events including recognised sporting events where the ticket price is not more than Rs. 500, continues to be exempt, and if the ticket price is more than Rs. 500, it continues to be taxed at the standard rate of 18%.
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