RAS question
Under the GST 2.0 reforms effective 22 September 2025, what new GST slab was introduced for sin goods, replacing the earlier 28% rate?
Correct answer: (C) 40%.
Under the GST 2.0 reforms effective 22 September 2025, sin goods moved to a new 40% GST slab instead of the earlier 28% rate.
Explanation
The answer is 40%. GST 2.0 created a new 40% slab for sin goods, replacing the earlier 28% rate, while the main GST structure was simplified to two slabs of 5% and 18%. The Press Information Bureau, Government of India explainer gives the same structure: the reforms shifted GST to a two-slab system of 5% and 18%, removed the earlier 12% and 28% rates, and applied 40% to luxury and sin goods such as pan masala, tobacco and aerated drinks. The revised rates and exemptions were to come into effect from 22 September 2025. So the exam point is not a general rate cut, but the creation of a higher demerit slab for sin goods within a simplified GST framework.
Why the other options are wrong
- (A) 25% is wrong because GST 2.0 identifies 40%, not 25%, as the new slab for sin goods.
- (B) 30% is wrong because the reform described uses 40% for luxury and sin goods, while the simplified main slabs are 5% and 18%.
- (D) 35% is wrong because the earlier 28% category was removed and sin goods were placed in the higher 40% slab, not a 35% slab.
Concept
This tests GST rate rationalisation, especially the distinction between the simplified main slabs and the separate higher slab for sin or luxury goods. RAS often asks such questions because indirect-tax reforms combine fiscal policy, consumer relief and compliance design.