Daijiworld Media Network- New Delhi

New Delhi, Aug 17: As the Union government moves forward with plans to rationalise GST rates, “sin goods” such as cigarettes, chewing tobacco, and gutka will continue to remain under steep tax slabs, with no change in their overall tax incidence, official sources confirmed on Saturday.

Though the new framework proposes a simplified two-rate structure with a 40% GST cap, these products will remain outside it. Sin goods already attract hefty cess – chewing tobacco at 160%, gutka at 204%, and cigarettes taxed through a combination of GST, compensation cess, and National Calamity Contingent Duty (NCCD). Together, these levies push their effective burden well above the ceiling.

Officials also hinted that the Centre and states may explore an additional ‘health or green levy’ on such products to address both public health concerns and revenue requirements. The matter will be discussed at the upcoming GST Group of Ministers (GoM) meeting on August 20-21, chaired by the Bihar Deputy Chief Minister.

Meanwhile, in a significant relief for the textile sector, the Centre has proposed to bring man-made fabrics under the 5% GST slab, down from the current 12%. Industry stakeholders have long argued that higher rates have eroded competitiveness and increased costs across the value chain.

If approved, the move will align GST on synthetic fabrics with natural fabrics, narrowing disparities in the textile sector and potentially reviving demand in an industry struggling against global headwinds.