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    Home » News » Tobacco, Alcohol, and Luxury Cars: What Will Get Costlier Under the Centre’s New GST Changes?
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    Tobacco, Alcohol, and Luxury Cars: What Will Get Costlier Under the Centre’s New GST Changes?

    By Virat VermaJuly 4, 2025
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    GST

    A major change may soon be introduced in India’s GST (Goods and Services Tax) framework. The central government is planning to replace the existing compensation cess with two new levies: a Health Cess and a Clean Energy Cess. This move is expected to impact products such as cigarettes, sugary drinks, luxury cars, and coal. If the proposal is approved, it could put an extra burden on the common man’s pocket.

    Health Cess on Harmful Products

    The Health Cess will be applied to goods generally considered harmful to society, such as tobacco products, cigarettes, and sugary beverages. These items are already taxed at the highest GST slab of 28%. Now, an additional Health Cess is being proposed to discourage their consumption and also increase government revenue.

    Clean Energy Cess to Impact Luxury Cars and Coal

    The second proposed levy, the Clean Energy Cess, is aimed at highly polluting items such as coal and expensive vehicles. The goal is to promote cleaner energy alternatives by increasing taxes on polluting fuels and luxury automobiles. This move aligns with Prime Minister Narendra Modi’s vision of a “Green India” and is expected to encourage the adoption of electric vehicles and eco-friendly technologies.

    Also Read-: How to File ITR: Step-by-Step Process and Required Documents Explained

    Major Change in GST Tax Slabs Also Under Consideration

    According to NDTV, the government is also considering eliminating the 12% GST slab. As a result, some products may shift to the lower 5% bracket, while others may move to the higher 18% slab. Everyday items like toothpaste could fall under the lower tax category. Though this change may initially cost the government up to ₹50,000 crore, officials believe lower prices will lead to higher consumption and increased tax collection in the long run.

    GST Collection on the Rise

    According to official data, GST collections in June rose by over 6.2%, reaching ₹1.85 lakh crore—up from ₹1.74 lakh crore during the same period last year. However, collections were slightly lower compared to ₹2.01 lakh crore in May and ₹2.37 lakh crore in April this year.

    These proposed changes signal a shift toward a more health- and environment-focused taxation system, while also aiming to simplify the existing GST structure.

    GST
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