Updated on: Sept 04, 2025 05:11 pm IST
GST tax rate change: The highest slab has been designed for luxury and non-essential goods such as high-end vehicles, aerated drinks and tobacco products.
India’s indirect tax system is set for a major reset from September 22, when a new 40% GST slab comes into force. This change marks the removal of the 12% and 28% brackets, leaving behind just three – 5%, 18% and the newly introduced 40%. The highest slab has been designed mainly for luxury and non-essential goods such as high-end vehicles, aerated drinks and tobacco products. While cigarettes have been slotted into the 40% bracket, this doesn’t automatically mean prices will shoot up – other factors play a role. For pan masala, gutka and chewing tobacco, the higher rate will kick in later due to unresolved technical issues linked to pending industry loans.
Full list of products that will attract 40% GST
1. Tobacco and Pan Masala (Sin Goods)
- Pan masala
- Gutka
- Chewing tobacco
- Unmanufactured tobacco and tobacco refuse (excluding leaves)
- Cigarettes
- Cigars, cheroots, cigarillos, and similar substitutes
2. Aerated and Sugary Beverages
- Carbonated drinks
- Cold drinks with sugar
- Caffeinated carbonated beverages
3. Luxury Cars
- Petrol cars with engine capacity above 1200 cc
- Diesel cars with engine capacity above 1500 cc
4. High-End Motorcycles
- Motorcycles with engine capacity above 350 cc
5. Super-Luxury Marine and Aircraft
- Yachts
- Personal aircraft, including helicopters
6. Other Sin or Luxury Items (broader category)
- Coal, lignite, peat
- Online gambling and gaming services
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