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With the new GST mechanism for pan masala, cigarette and tobacco products coming into effect from February 1, the States will have a higher share of revenue, said sources. Also, GST incidence on these products will remain the same.
As the Centre pushes ahead with plans to simplify the GST rate structure, sin and demerit goods — including cigarettes, chewing tobacco and gutka— will remain under high tax slabs, with no change in overall tax incidence, an official source said.
The proposed revision of the Goods and Services Tax (GST) slabs structure may not raise the weighted average levy, but is likely to keep the tax incidence on “demerit and luxury goods” at roughly the currently levels.