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Experts moot 'sin tax' over 40% special rate on demerit goods
Financial Express Kochi
|August 19, 2025
• Tax may have a combined floor for Centre, states
EXPERTS HAVE RECOMMENDED a sumptuary (sin) tax—akin to excise duty—with a common floor rate for demerit goods, over and above the special 40% GST rate. The impost could have a combined floor rate split equally between the Union and state governments.
A harmonised tax structure is essential to avoid a race to the bottom and to ensure stable and consistent revenue collection across states, they said.
The idea is to ensure that the high tax incidence on sin goods remains, and not fall from the current levels.
The sumptuary tax, however, may require legal changes. It is for the GST Council and the government to work this out.
Currently, the GST is levied on a common base, with the Centre and states having a 50:50 share and defined administrative rights. Other indirect taxes, like central excise, customs duty and state-level taxes like stamp duty, sales tax on petroleum products, etc. are collected, administered and appropriated under different laws.
This story is from the August 19, 2025 edition of Financial Express Kochi.
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