India to introduce new 2-rate GST system
Big GST changes are on the way—India plans to roll out a new two-rate system with a hefty 40% 'sin tax' on alcohol, tobacco, and gaming.
Most other goods will now be taxed at either 5% or 18%, replacing the old mix of rates.
Sin tax on gaming, tobacco, and alcohol
If you're into gaming or these industries affect your wallet, this move is meant to discourage unhealthy habits while boosting government revenue.
For tobacco especially, even with the new GST rate jumping to 40%, the total tax (including cess) stays close to a steep 88%.
Expect some price shifts and possible changes in what people buy—investors should watch how markets react.
What about other goods?
Nearly all goods that used to be taxed at 12% drop down to 5%, while around 90% of items from the old top bracket are likely to shift to the 18% category.
Essentials like food and medicines keep their low or zero taxes. Special rates for diamonds (0.25%) and jewelry (3%) aren't going anywhere.
The goal? Make taxes simpler and nudge everyone toward better compliance.