New Delhi: Starting September 22, some everyday items and luxury products will become more expensive due to a new 40 percent GST rate. The GST Council introduced this new slab for luxury goods and sin products. Items like soft drinks, energy drinks, and premium vehicles will now attract the highest tax.
Soft Drinks and Beverages Hit by 40 percent GST
All types of aerated water, carbonated drinks, caffeinated drinks, and non-alcoholic flavoured beverages will be taxed at 40 percent. This means popular soft drinks and energy drinks sold in stores will now cost more for consumers.
Luxury Vehicles and Personal Transport
High-end vehicles will also face the new tax. Cars with engines larger than 1,200cc or longer than 4,000 mm, motorcycles over 350cc, and luxury personal transport like yachts, private aircraft, and racing cars will be included. The 40 percent GST applies only when these vehicles are for personal or recreational use, not commercial use.
Sin Goods to Face Higher Tax Later
Products like pan masala, gutkha, cigarettes, chewing tobacco, zarda, raw tobacco, and bidis are marked for the 40 percent GST slab, but the tax increase will not happen immediately.
Reason for Delay on Tobacco Products
Finance Minister Nirmala Sitharaman clarified that tobacco and other sin products will continue under the current tax system until pandemic-related compensation loans are fully repaid. These loans were taken by the government to compensate states for GST revenue losses during COVID-19. Once these loans and interest are cleared, the GST Council will decide when to implement the 40 percent rate for sin goods.
What Consumers Should Know
From September 22, consumers will notice higher prices for soft drinks, energy drinks, and luxury vehicles. Tobacco and similar products will remain at current prices for now, but may get costlier in the future once government loans are repaid.
