Readymade garments costing up to₹1,500 would attract 5% GST, tand hose between₹1,500 and₹10,000 would attract 18%. Garments costing above ₹10,000 would attract 28% tax.
The GoM on GST rate rationalisation decided on Monday (December 2, 2024) to hike the tax on sin goods like aerated beverages, cigarettes, tobacco, and related products to 35% from the present 28%, an official said.
The Group of Ministers (GoM) on rate rationalisation under Bihar Deputy Chief Minister Samrat Chaudhary also decided to rationalise tax rates on apparel.
As per the decision, readymade garments costing up to ₹1,500 would attract 5% GST, those between ₹1,500 and ₹10,000 would attract 18%, and garments costing above ₹10,000 would attract 28% tax.
The GoM on rate rationalisation will propose tax rate tweaks on 148 items to the GST Council. “The net revenue impact will be positive,” an official said.
The GoM report is expected to be discussed by the GST Council—chaired by the Union Finance Minister and comprising her state counterparts—on December 21. The council will then make a final decision on GST rate changes.
“The GoM has agreed to propose a special rate of 35% on tobacco and related products and aerated beverages. The four-tier tax slab of 5, 12, 18, and 28% will continue, and the GoM proposes a new rate of 35%,” said the official.
GST is a four-tier tax structure with 5, 12, 18, and 28% slabs.
Under GST, essential items are exempted or taxed at the lowest slab, while luxury and demerit items attract the highest slab. Luxury goods like cars and washing machines and demerit goods like aerated water and tobacco products attract cess on top of the highest 28% slab.
The official said the GoM on rate rationalisation finalised its report on Monday (December 2, 2024), which will be presented to the council.
The official added that the council will now decide whether there is further scope for rate rationalisation and may decide to retain the GoM so that the rationalisation exercise continues periodically.
In its last meeting in October, the GoM had proposed reducing GST on packaged drinking water of 20 litres and above to 5% from 18%.
It also proposed to the council reducing the GST on bicycles costing less than ₹10,000 to 5% from 12%.
Also, GST on exercise notebooks would be reduced to 5% from 12%. The GoM also proposed hiking GST on shoes above ₹15,000/pair from 18% to 28%.
In the previous meeting on October 19, it also proposed hiking GST on wrist watches above ₹25,000 from 18% to 28%.
