The Group of Ministers (GoM) has recommended increasing the Goods and Services Tax (GST) on aerated drinks, cigarettes, and tobacco products to 35% from the current highest slab of 28%. The proposal aims to generate additional revenue to offset losses incurred by the Centre and states due to GST rate cuts on essential commodities and commonly used items.
The GoM, led by a state finance minister, argued that products like aerated drinks and tobacco are non-essential and pose health risks. By raising GST on these items, the government seeks to encourage healthier consumption patterns while boosting tax revenue.
The recommendation comes as states express concerns over declining compensation under the GST framework. The move is expected to help bridge revenue gaps, particularly in the wake of financial pressures from various welfare schemes and infrastructure projects.
Opposition parties and industry stakeholders have raised concerns, warning that higher taxes on tobacco and aerated drinks could lead to increased smuggling and black-market activities. The proposal will now be discussed in the GST Council for final approval.
