GST rate on sin goods, cars may go up

THE OBJECTIVE is to ensure that consumers, government, and industry benefit from the cessation of the compensation cess and the rate rationalisation process.

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There are four major GST slabs at present—5%, 12%, 18% and 28%. The central and state GST officers are currently deliberating a reduction in the number of slabs to two, possibly by abolishing the 12% slab. Several goods, including some food items, could move to the 5% slab, if the 12% rate is done away with, while some could shift to the higher slab of 18%.

Of the gross GST revenues, the 18% slab contributes around 65%, followed by the 28% slab (16%), 5% (10%) and 12% slabs (18%). The remaining 1% comes from other special rates being applied on rate for gold, jewellery and precious stones. The discussions, sources said, are focused on whether the 28% slab rate should be increased to 35% or 40% after the compensation cess comes to an end, latest by March 2026.