Tobacco products now expensive
In the latest meeting of GST Council, a big decision related to common consumers has come out. Now the tax burden on cigarettes, gutkha, paan masala and all tobacco products will increase further. The government has increased the GST rate on all these items directly from 28% to 40%. This new rate will be applicable from 22 September 2025. Not only tobacco products, now luxury cars, fast food and sweet sugar drinks will also be taxed at 40%. That is, expensive hobbies will become more expensive now.
Large rise in cigarette-pan masala prices
This decision of the government will directly affect the pocket. For example, if a cigarette packet is currently available for Rs 256, it will cost around Rs 280 after the new rates. Meaning a direct increase of 24 rupees. Similarly, prices of products like gutkha, yolk, chewing tobacco and betel spices will also increase rapidly. All these products fall under the category of ‘Sin Goods’ and they have already been applied to tax and compensation cess at high rates.
From fast food to sugar drinks, everyone will be charged 40% tax
Apart from tobacco products, the government has also put many other items in 40% GST slab. This includes-
- Fast food and junk food
- Carbonated and flavor
- Super luxury cars and personal aircraft
- Zarda and Aided Sugar Products
All these items have now been kept in the new category of ‘Sin and Luxury Goods’ by the government. The reasoning behind this is that such products affect health and environment, and it is necessary to control their consumption.
New rule of tax on retail price
In the old system, tax on these products was fixed at the cost of their transaction value. But now this rule has also changed. Now tax will be calculated on the basis of retail cell price (RSP). This will curb tax evasion and companies will have to strictly follow the rules. Also, until the old loans related to the cess are compensated, there is no possibility of getting any relief in tax on these products.
Two slabs finished, tax system easier
The GST Council has also taken important steps towards making the tax system simple and transparent. Tax slabs of 12% and 28% have been abolished. Now most of the items will remain in only 5% or 18% slabs. This change while some things can be cheaper for the middle class, this entire decision will increase the tax collection of the government on the one hand, on the other hand there is an attempt to remove people from harmful things like tobacco, fast food and sweet drinks.