NEW DELHI: The passage of the Goods and Services Tax Bill seems as close as it has ever been. With a broad consensus emerging between parties, it seems the biggest tax reform inrecent Indian history will finally see the light of the day.
That said, the new tax regime, if and when its implemented, will benefit all except one thing – man’s vices.
Cigarettes, drinking, clubbing and expensive dinners will all become even more expensive as the government seeks to punish such activites.
Cigarette smokers will be the one heavily punished as their holy smoke will now cost them extra money.
“The draft bill proposes inclusion of tobacco under GST and chargeable at around 40 per cent, while central excise on cigarettes may continue. This may lead to an increase in consumer-level prices of the products and may have an adverse impact on volumes of cigarette companies,” MOSL said.
Once your smoke is gone, your glass of wine too will be taken away slow and steadily as a revenue neutral tax rate of 18 per cent willmean that you will have to pay 3 percentage points more service tax at bars and clubs.
Plus, alcohol being excluded from the ambit of GST will give states further more leeway to raise excise duty on the product. Alcoholic beverages are likely be kept out of the GST ambit, which will be a negative for the industry due to disallowance of input goods credit,” the brokerage said.
Ultimately, the consumers of man’s vices will have to pay the price under the new tax regime.
“Since, services constitute a larger share in the consumption basket than in CPI, Indian consumers are likely to feel the pinch of higher prices of services after GST is implemented,” said Motilal Oswal Securities.