28% GST on luxury and sinful products will continue

4 Jul 2022 , 03:42 PM

According to Revenue Secretary Tarun Bajaj on Monday (04-07-2022), the administration aims to maintain the maximum GST slab of 28% for luxury and sin items but is willing to consider combining the three existing slabs of 5, 12, and 18% into one.

Speaking to the leaders of the industry, Bajaj claimed that the rate rationalization effort of the GST Council is the outcome of an examination of GST five years after its implementation and that the policymakers do not have a “fetish” for raising the tax rates to the level of 15.5 %, which is revenue-neutral.

Regarding the industry’s desire that petroleum goods be included in the GST net, he stated both the Center and the states are hesitant because fuel makes up a greater portion of their income. “We’ll need to wait for a while.” “In a rising economy, one with such a wide wealth gap, there would be certain luxury and sinful goods that would and should draw a higher rate of taxes. Of the 5, 12, 18, and 28%, we would have to maintain the 28%.

“But it remains to be seen if we can reduce the rates of 5, 12, and 18 % to only 2 rates to begin with. After that, we’ll have to wait and watch how the country develops to see whether we can eventually reduce the rates to just one rate. It is a really challenging task, “At an Assocham event, Bajaj stated.

With regard to the GST, there is a four-rate system that levies a peak rate of 28% on autos and a low rate of 5% on necessities. The other tax brackets are 12 and 18%.

Additionally, a cess is charged on products with the highest tax rate of 28%, including luxury, sin, and demerit goods. The money from the cess is put into a separate corpus called the Compensation Fund, which is intended to make up for the income loss the state experienced as a result of the introduction of the GST.