Tobacco, cigarettes, cold drinks to cost more as 40percent tax applies, full list of items here

India’s indirect tax system is going to change from September 22, when the highest slab of 40 percent tax will be imposed on luxury and non-essential goods such as soft drinks, tobacco products including cigarettes, and luxury cars.

Written by: Joy Pillai Edited by: Joy Pillai

Published: September 5, 2025, 8:52 PM IST

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https://www.india.com/news/india/tobacco-cigarettes-cold-drinks-to-cost-more-as-40percent-tax-applies-full-list-of-items-here-8056627/ Copy

Tobacco, cigarettes, cold drinks to cost more as 40percent tax applies, full list of items here

New GST Rates: The indirect tax system is ready for a major reset from September 22 when the new 40 percent GST slab will be imposed on sin products such as tobacco, cigarettes and cold drinks. The old 12 percent and 28 percent brackets will be removed and only 5 percent, 18 percent and the newly introduced 40 percent slabs will remain in force. Notably, the government has designed the highest slabs primarily for luxury and non-essential items like luxury vehicles, soft drinks and tobacco products. However, cigarettes also fall into the 40 percent bracket, but this doesn’t mean that their prices will increase as other factors also play a role. For tobacco products, pan masala and gutka, the revised higher rate will be imposed but not immediately due to unresolved technical issues linked to pending industry loans.

Cigarettes And Tobacco Products To Cost Even More

Under the GST reform, 40 percent GST has been imposed on sin products, including tobacco, cigarettes and cold drinks. But these products to cost even more. As per a report by Business Today, the government can increase even more tax on these items.

The report states that the government can also impose cess on tobacco and cigarettes, which fall on harmful items category, in addition to 40 percent GST.

According to Chairman of the Central Board of Indirect Taxes and Customs (CBIC) Sanjay Kumar Agarwal, said that under new GST rules, a maximum tax of 40 percent can be imposed on these products. However, the government can make some arrangement in order to maintain the remaining taxes at the current level.

However, Agarwal refrained himself of giving details about that arrangement.

In an interview to Business Today, he further said that if there is a need for legislative amendment or bill, it will be considered by the government.

Is There Any Extra Tax On Luxury Cars And Bikes?

Agarwal stated that no extra tax will be imposed on luxury cars, luxury bikes and other super luxury items apart from 40 percent tax. It is to be noted that under the new GST reform, sin goods and super luxury items will be taxed at 40 percent instead of the current 28 percent.

The chairman of CBIC further informed that the harmful subtax of 28 percent is expected to continue till December.

New GST Rates: Full List Of Sin Goods That Will Attract 40 Percent Slab

HIGHLIGHTS

• From September 22, India’s GST will move to three slabs (5%, 18%, 40%), with the new 40% rate applied to sin goods including tobacco, cigarettes and soft drinks.
• Cigarettes and other tobacco products may face additional cess beyond 40% GST.
• No extra tax will be imposed on luxury cars, bikes apart from the 40% GST.
• The current 28% harmful-goods subtax is expected to continue until December.

Tobacco and Pan Masala Products

• Pan masala
• Gutka
• Chewing tobacco
• Unmanufactured tobacco (excluding leaves)
• Cigarettes
• Cigars
• Sof Drinks
• Co2 filled carbonated drinks

Drinks with sugar

• Caffeinated carbonated drinks

Luxury Cars

• Petrol cars with over 1200 cc engine capacity
• Diesel cars with over 1500 cc engine capacity

Luxury Bikes

• Bikes with engine capacity above 350 cc

Luxury Marine

• Yachts
• Private aircraft and choppers

Other Items

• Coal, lignite, peat
• Online gambling