New 40% tax slab will cover luxury,demerit goods

Union Finance Minister Nirmala Sitharaman slams Congress Party for demanding 5 per cent tax on tobacco and gutkha. The Congress party wants us to give it at 5%. Congress should decide whether it wants to oppose or support the issues that are in the interest of the people. People will expose them, she said. Sitharaman said, the Congress Party considered it impossible to implement GST during their tenure. We have implemented the GST and are also doing second-generation reforms.

Is the Congress party demanding 5 per cent tax on tobacco and gutkha? The Congress party wants us to give it at 5%.

The Congress Party considered it impossible to implement GST during their tenure.

We have implemented the GST and are also doing second-generation reforms under… pic.twitter.com/W2Svs2mHic

— Nirmala Sitharaman Office (@nsitharamanoffc) September 3, 2025

The new 40 per cent tax slab will cover around a dozen luxury and demerit goods, including tobacco and paan masala. However, Uttar Pradesh Finance Minister Suresh Khanna clarified that no decision has yet been taken on imposing an additional levy on such goods.The marathon 10.5-hour meeting in New Delhi concluded with all decisions taken by consensus, without a vote.

The new rate structure will be applicable from September 22 and could lead to a revenue shortfall of Rs 93,000 crore, noted experts,though the new sin tax is expected to generate nearly Rs45,000 crore in additional revenue. West Bengal Finance Minister Chandrima Bhattacharya pegged the total loss due to rationalisation at Rs 47,700 crore. Punjab Finance Minister Harpal Singh Cheema said while states will face revenue losses, the move prioritises citizens’ welfare. “No additional tax will be levied on the 40 per cent slab. States will face losses, but we stand with our people,” he said.Jharkhand Finance Minister Radha Krishna Kishore said his state has sought compensation for revenue loss. “We had proposed the Centre provide compensation, but there is no clarity yet. Now it is up to the central government,” he remarked.

(Business Correspondent)