The Goods and Services Tax rates on cigarettes, carbonated drinks, and high-end cars may go up as a proposal is under consideration to replace compensation cess with health and green cess, reported NDTV citing sources,
At present, the select items fall under the highest GST slab of 28% and are subject to compensation cess. This cess, introduced in 2017 to offset state revenue losses following the rollout of GST, is set to expire on March 31, 2026.
A Group of Ministers (GoM) led by Minister of State for Finance Pankaj Chaudhary is looking into the future of the levy beyond March 2026, as per the media report.
Sources indicated that discussions are ongoing about reducing the number of GST slabs to three, potentially by eliminating the 12% slab. If the 12% rate is removed, several items, including certain food products, may be moved to the 5% slab, while others could be shifted to the higher 18% rate. The issue is expected to be addressed at the upcoming GST Council meeting, according to the media report.
