Yes, a 40% GST trended on X (formerly Twitter) following a decision by the Goods and Services Tax (GST) Council. The council has introduced a new, higher tax slab of 40% specifically for “sin” and “luxury” goods, as part of a major overhaul of the tax system.
The New GST Structure
The GST Council has approved a new simplified two-slab system of 5% and 18% for most goods and services, aimed at easing the tax burden on everyday items. However, a special 40% slab has been created for certain categories of goods.
The new tax structure is part of the “GST 2.0” reforms, which are set to go into effect on September 22, 2025.
Key Items Affected
The new 40% GST rate will be applied to:
- Cigarettes and Tobacco Products: The GST Council has proposed this rate for a range of tobacco products, including cigarettes, pan masala, and gutkha. This move is aimed at discouraging consumption of these harmful products.
- Gambling and Casinos: The GST on entry to casinos, race clubs, and sporting events like the IPL has been increased to 40% from the previous 28%. This applies to online money gaming as well, which will also be taxed at the full face value of bets.
- Luxury Cars: Large and luxury cars, including SUVs with engines over 1500cc and a length of more than 4000mm, will now also attract a 40% GST rate.
It’s important to note that while the new rates on gambling and luxury cars are set to be implemented, the GST Council has deferred the rollout of the 40% rate for tobacco products for the time being. They will continue to be taxed at the current 28% GST plus an additional compensation cess until the government’s loan to compensate states for revenue loss is repaid.
Alcohol is not currently under the GST regime; it is still taxed under state-specific excise duties and VAT. Therefore, the new 40% GST rate does not apply to it.
