GST 2.0 may hit alcohol, gaming, cigarettes with 40% tax
What's the story
The Indian government's proposal to impose a 40% "sin tax" under its new Goods and Services Tax (GST) 2.0 framework is likely to bring attention to specific stocks in the market. The proposed revamp would simplify the GST structure into two main slabs: 5% for essentials and 18% for most goods. A special rate of 40% would be reserved for luxury and sin goods such as alcohol, tobacco products, and gambling-related items.
Tax details
Understanding the 'sin tax'
A sin tax is an excise duty levied on goods deemed harmful or expensive to society. These taxes are usually imposed on products like cigarettes, alcohol, gambling, and vaping. The revenue generated from these taxes is often used to fund government programs. By making consumption more expensive, sin taxes aim to deter use and generate additional revenue for public welfare initiatives.
Rate stability
Special rates that will remain unchanged
Certain special rates will remain unchanged under the new GST regime. These include a 0.25% tax on diamonds and precious stones, and a 3% tax on jewelry. This is aimed at promoting industry-specific growth while ensuring that certain sectors are not adversely affected by the proposed changes in the GST structure.