India may see its first major GST restructuring since 2017, with a proposed special 35% tax rate on “sin goods” like tobacco and aerated drinks, up from the current 28%. This recommendation, finalized by a Group of Ministers (GoM), aims to offset revenue losses from rate cuts on common-use items.
Other key proposals include GST adjustments for 148 items, such as tiered rates for garments based on price and higher taxes on luxury goods like shoes, watches, and cosmetics. Additionally, exemptions may apply to health insurance premiums for senior citizens and certain term life policies.
The GST Council will discuss these changes at its December 21 meeting, along with extending the timeline for a report on the compensation cess, currently levied on sin and luxury goods, until March 2026 to manage debt repayment.
