The Group of Ministers (GoM) on Monday, December 2 decided to hike the rate of goods and service tax (GST) charged on aerated beverages, cigarettes, tobacco and related products to 35 per cent, from its current level of 28 per cent, PTI  reported citing an official aware of the development.

"The GoM has agreed to propose a special rate of 35 per cent on tobacco and related products and aerated beverages. The four-tier tax slab of 5, 12, 18, and 28 per cent will continue and a new rate of 35 per cent is proposed by the GoM,"  the news agency quoted the unnamed official as saying.

As of today, the GST is a four-tier tax structure with slabs at 5, 12, 18, and 28 per cent.

The GoM under the Deputy Chief Minister of Bihar, Samrat Chaudhary, also has decided to rationalise tax rates on apparel, reported the agency.

As per the report, readymade garments costing up to ₹1,500 would attract 5 per cent GST, those between ₹1,500 and ₹10,000 would attract 18 per cent, and garments above ₹10,000 would attract 28 per cent tax. 

"The net revenue impact will be positive," said the official cited by the news agency. The GoM will propose the rate changes on 148 items to the GST Council held on December 21. The GST Council will make the final decision on the GST rates.

The GoM on rate rationalisation has finalised its report on Monday to be presented before the council, as per the news agency.

The council will decide whether there is further scope for rate rationalisation and may decide to retain the GoM so that the rationalisation exercise continues periodically, according to the official.

GST for essential goods are either exempted or taxed at the lowest tax slab, with the luxury and demerit items attracting the highest tax slab. Luxury goods like cars and washing machines, and demerit goods like aerated water and tobacco products attract cess on top of the highest 28 per cent tax slab. 

In the last meeting in October, the Group of Ministers proposed a GST reduction on packaged drinking water of 20 litres and above to 5 per cent, from 18 per cent. The GoM also decided to propose the GST reduction on bicycles costing less than ₹10,000 to 5 per cent, from 12 per cent, as per the report. 

Also, GST on exercise notebooks would be reduced to 5 per cent from 12 per cent. The GoM also proposed hiking GST on shoes above ₹15,000 per pair from 18 per cent to 28 per cent. Along with that, GoM also proposed increasing the GST on wristwatches above ₹25,000 from 18 per cent to 28 per cent in the previous meeting on October 19, PTI reported.