The Goods and Services Tax (GST) rates on certain items, including cigarettes, carbonated drinks, and luxury cars, may soon see a hike, according to government sources. This change is being considered as part of a proposal to replace the existing compensation cess with a new health and green cess, aimed at promoting sustainability and addressing health concerns.

Currently, items like cigarettes, carbonated drinks, and high-end cars fall under the 28% GST bracket, which also includes the compensation cess. However, the compensation cess is set to expire on March 31, 2026, and discussions are underway to determine how this levy will evolve after that. A Group of Ministers, led by Minister of State for Finance Pankaj Chaudhary, is actively examining the future of the cess, and one potential outcome is a rise in GST rates for these select items to replace the expired compensation cess.

Additionally, deliberations are underway about simplifying the GST structure by reducing the number of slabs to three, possibly by eliminating the 12% slab. If this change happens, some goods, including certain food items, could move to the 5% slab, while others may shift to the higher 18% slab. These potential changes will be discussed further in the upcoming GST Council meeting, which is expected to address these matters in more detail.

As these proposals move forward, they could have a significant impact on the cost of various goods, especially for consumers of cigarettes, carbonated drinks, and luxury cars. Stay tuned for updates on how these changes might affect the GST structure and the broader economy.