New GST Rates from September 22: Highest Tax on Luxury Items – Full Sector-Wise List

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by

Himanshu
in ,

The Government of India has revised the Goods and Services Tax (GST) rates, effective September 22, impacting multiple sectors. This update brings both relief and burden depending on the category of goods. While some essential items continue to attract lower taxes, luxury and high-value products have been moved to the highest GST slab of 40%.

This article breaks down the latest GST changes, their implications, and provides a complete sector-wise list of items.

Key Highlights of New GST Rates

CategoryPrevious GST RateNew GST Rate (w.e.f Sept 22)Impact
Luxury Cars & SUVs28% + Cess40%Sharp price rise for premium buyers
Cigarettes & Tobacco Products28% + Cess40%Becomes significantly costlier
Consumer Electronics (ACs, TVs > 32 inches, Refrigerators, Washing Machines)28%18%Relief for middle-class consumers
Packaged Food & Dairy Items12% – 18%5% – 12%Affordable for daily essentials
Textiles & Footwear12%5%Boost for retail sector

Why the GST Change?

  1. Revenue Neutrality – Balancing tax collections after recent rate cuts in consumer goods.
  2. Luxury vs Essential Segregation – Heavier tax burden on luxury and harmful products, relief on essentials.
  3. Boost to Consumption – Lower taxes on electronics, textiles, and food are aimed at stimulating demand.

Sector-Wise GST Rates List

🚘 Automobiles

  • Luxury Cars & SUVs – 40%
  • Hybrid Cars – 28%
  • Electric Vehicles (EVs) – 5%

🚬 Tobacco & Sin Goods

  • Cigarettes (all categories) – 40%
  • Tobacco Products (gutka, chewing tobacco, cigars) – 40%
  • Pan Masala – 28%

📺 Consumer Electronics & Appliances

  • Air Conditioners (ACs) – 18%
  • Refrigerators – 18%
  • Washing Machines – 18%
  • LED TVs above 32 inches – 18%
  • LED TVs up to 32 inches – 12%
  • Mobile Phones – 12%
  • Laptops & Desktops – 18%

🥛 Food & Beverages

  • Packaged Milk & Curd – 5%
  • Branded Paneer – 5%
  • Butter, Ghee – 12%
  • Packaged Cereals & Pulses – 5%
  • Packaged Flour (Atta, Maida) – 5%
  • Mineral Water – 18%
  • Aerated Drinks/Soft Drinks – 28%

👕 Textiles & Footwear

  • Cotton Fabrics – 5%
  • Man-made Fabrics – 12%
  • Readymade Garments below ₹1,000 – 5%
  • Footwear below ₹1,000 – 5%
  • Premium Footwear above ₹1,000 – 12%

🏭 Industrial & Miscellaneous

  • Cement – 28%
  • Paints & Varnishes – 18%
  • Steel Products – 18%
  • Fertilizers – 5%
  • Renewable Energy Equipment – 5%

Implications of the New GST Structure

  1. Consumers – Middle-class families benefit from reduced rates on electronics, food, and daily use items.
  2. Industries – Automobile and tobacco industries may see reduced demand due to higher GST.
  3. Government – Stronger revenue from luxury and sin goods, while encouraging consumption in affordable categories.
  4. Retail Sector – Likely to witness higher sales volume due to lower GST on garments and footwear.

Comparative GST Rate Table (Before vs After)

ItemOld GST RateNew GST Rate
Luxury Cars28% + Cess40%
Cigarettes28% + Cess40%
Air Conditioners28%18%
Refrigerators28%18%
Washing Machines28%18%
Packaged Milk Products12%5%
Cotton Fabrics12%5%
Footwear below ₹1,00012%5%

Conclusion

The new GST rates from September 22 represent a strategic shift – making essential and mass-consumption goods cheaper, while taxing luxury and harmful products at the highest slab of 40%. This not only provides relief to households but also aligns with the government’s long-term goal of encouraging responsible consumption.

Overall, the changes are expected to stimulate demand in the consumer sector while ensuring higher revenue from luxury and tobacco products.