New Delhi: There are no plans yet to have a 35 percent tax slab under the Goods and Services Tax (GST), and any decision on this would be taken together in consultation with GST Council, minister of state for finance, Pankaj Chaudhary told reporters in Delhi on Friday.
Chaudhary was responding to a question if the government is considering the recommendation made by the Group of Ministers (GoM) on rate rationalisation. The GoM has recommended a new tax slab of 35% for luxury and ‘sin’ goods like tobacco, cigarettes, aerated drinks, etc.
The MoS finance told reporters that the GST Council would take the final decision and the same will be in consultation with the states, who are also members of the Council.
The compensation cess levied under GST would cease to exist after March 2026, and the same will be merged with the 28 percent tax slab to arrive at a new tax rate that will be levied on demerit goods, which currently attracts compensation cess. For example, Gutkha containing tobacco attracts the highest GST rate of 28 percent and a compensation cess of 204 percent, taking the effective tax rate to 252 percent. In some cases, the compensation cess is levied on the MRP (maximum retail price) of the product after including the 28 percent GST.
Currently, compensation cess is levied on luxury and sin goods like aerated drinks, tobacco and related products, motor vehicles, yacht and other vessels for pleasure or sports. Compensation Cess was levied to compensate the states for the losses incurred by the states due to implementation of GST.
Meanwhile, the MoS finance apprised the media of the government’s achievements in building infrastructure in the past 10 years. The minister said that from roads to railways to civil aviation, the country's infrastructural landscape has seen unprecedented growth, fostering connectivity, economic development, and improved quality of life. He outlined how the allocation to capex grew under the Modi government from Rs 5 lakh crore in 2021-22 to Rs 11.11 lakh crore in 2024-25. The minister said that despite slow growth in capex spending in the current financial year, the government is confident of fully utilising the fund allocated (Rs 11.11 lakh crore) for infra spending in FY25.