Sin Goods: Know the products which will be taxed 40% under new GST rates
The 56th GST Council meeting has recommended significant changes to Goods and Services Tax (GST) structure. The key decisions include simplifying tax slabs to 5%, 18%, and 40% (for sin goods), effective September 22, 2025.
New Delhi: The 56th meeting of the GST Council under the chairpersonship of Union Finance & Corporate Affairs Minister Nirmala Sitharaman recommended changes in GST tax rates with an aim to provide relief to people and measures for facilitation of trade in GST.
Some of the important decisions taken in the GST Council meeting are set to benefit the common man as it was recommended to eliminate the 12% and 18% tax slabs and only 5% and 18% will remain. The two-structure tax slab would ensure many goods would be cheaper after the new GST rates are applicable from September 22, 2025.
Amidst all this, Sin Goods have been a hot topic of discussion because of the recommendation to levy 40% GST on such items. The purpose of this decision is to reduce the use of these items and increase the government's income by using it for health and social welfare works.
What are Sin Goods?
Sin Goods are those products which are considered harmful to the health of people and society, such as tobacco, alcohol, gutkha, pan masala etc. The government levies high taxes on these goods so that their use can be reduced. The previous rules stated that a separate cess (Compensation Cess) was levied on the particular products along with 28% GST, which brought the total tax to about 40%. However, in the new GST structure, the cess has been removed and a new tax slab of 40% has been created, due to which the tax rate has become simple and clear.
Items included under 40% GST tax slab
- Luxury vehicles and transport
- Motor vehicles with both spark-ignition internal combustion reciprocating piston engine and electric motor as motors for propulsion, of engine capacity exceeding 1200cc or of length exceeding 4000 mm.
- Motor vehicles with both compression-ignition internal combustion piston engine [diesel-or semi diesel] and electric motor as motors for propulsion, of engine capacity exceeding 1500cc or of length exceeding 4000 mm.
- Motorcycles having engine capacity more than 350 cc
- High-end cars made for passenger transport such as station wagons and racing cars
- Private helicopters and airplanes
- Yachts and other luxury boats
- Tobacco and its related products
- Pan masala, gutkha, bidi, tobacco products
- Unprocessed tobacco and tobacco powder (excluding leaves)
- Cigars, cigarette holders, smoking pipes
- beverage-
- Aerated drinks with added sugar or sweeteners
- Caffeinated beverages
- Carbonated fruit drinks or fruit-based drinks
- Other non-alcoholic beverages