New Delhi: The GST Council has announced major changes to India’s Goods and Services Tax system, reducing the number of tax slabs to just two — 5 percent and 18 percent — effectively removing the earlier 12 percent and 28 percent slabs. While this move is expected to make many essential goods more affordable for consumers, certain harmful and luxury items will now face a special GST rate of 40 percent.

The decision, taken during the 56th GST Council meeting in New Delhi on Wednesday, aims to curb the consumption of harmful products while ensuring fairness in taxation. Finance Minister Nirmala Sitharaman explained that the higher tax rate is intended to discourage the use of products that are harmful to health and lifestyle.

Items that will now attract the 40 percent GST include pan masala, cigarettes, gutkha, chewing tobacco, zarda, sugary and carbonated drinks, luxury cars, private aircraft, fast food, and super luxury goods. This 40 percent GST will serve as the sole tax on these products, with no additional cess or sub-tax applied.

The GST Council has not yet announced the exact date from which the 40 percent GST will come into effect, but authorities said the timeline will be declared in due course.