40 Percent GST Items List: Full List of Goods & Products in 40% Slab
Introduction using the keywords in two lines. Understanding the 40% GST Rate
The 56th GST Council Meeting, held on 3rd September 2025, has recommended several key changes to GST rates for simplification of tax structure. This transformed the GST tax structure from the existing 4-slab (5%, 12%, 18% and 28%) to two major slabs (5% and 18%) along with a special rate of 40% for luxury and sin goods. This article discusses 40% GST slab item lists.
40% GST Items List
The items that have been categorised for special 40% GST rate are,
Items | Earlier | Revised |
| Tobacco/ pan masala | 28% | 40% |
| Unmanufactured tobacco, tobacco refuse (excluding tobacco leaves); Cigars, cheroots, cigarillos, cigarettes; other manufactured tobacco and substitutes including homogenised/reconstituted tobacco, extracts, essences | 28% | 40% |
| Products containing tobacco or nicotine substitutes intended for inhalation without combustion | 28% | 40% |
| Aerated waters | 28% | 40% |
| Caffeinated beverages | 28% | 40% |
| Carbonated beverages of fruit drinks / with fruit juice | 28% | 40% |
| Other non‑alcoholic beverages | 18% | 40% |
Cars above 4-meter length (beyond small car threshold: Petrol cars with engine capacity above 1200 cc and diesel cars with engine capacity above 1500 cc) | 28% | 40% |
| Two wheelers with 350 cc and above engine capacity | 28% | 40% |
| Aircraft for personal use | 28% | 40% |
| Smoking pipes and cigarette/cigar holders | 28% | 40% |
| Admission to casinos, race clubs, and sporting events like IPL | 28% with ITC | 40% with ITC |
| Licensing of race club bookmakers | 28% with ITC | 40% with ITC |
| Leasing and renting goods without operators (e.g. self-driven rented car) | 28% with ITC | 40% with ITC |
| Actionable claim from casino or other betting activities | 28% with ITC | 40% with ITC |
| Pleasure and sports vessels (e.g. yachts) | 28% | 40% |
Note: It is crucial to understand that the revised GST rate will not come into effect from 22nd September 2025 on chewable and combustible tobacco, pan masala and other related tobacco goods. They will continue to be charged at a 28% GST rate along with an additional levy of compensation cess. Such cesses vary from 5% to 200% for premium-grade tobacco products. This practice will continue until the union government’s compensatory liability toward state governments is fully discharged.
Key Categories of Goods under 40% GST Slab
The key categories of goods and services included under the special 40% GST slab are,
- Tobacco and related intoxicants as sin goods (e.g., cigarettes, bidis, pan masala, caffeinated drinks)
- Drinks with high sugar content and caffeinated
- Super-luxury and luxury 4-wheelers, 2-wheelers and personal use yacht, aircraft, etc
- Casino games and betting activities
- Miscellaneous items like personal-use small firearms
Impact of 40% GST on Businesses and Consumers
Impact on Consumers:
- GST 40% items in the “sin” food category will be less affordable for consumers. This will discourage consumption. Indirectly, this will have a positive impact on public health.
- To keep these “sin” foods affordable, companies may choose to reduce package content to maintain the price point. It will also reduce consumption as intended.
- For luxury personal transport vehicles, the existing GST rate was 28% along with compensation cess (maximum 22%). It takes the actual applicable rate to 50%. A flat rate of 40% will result in a marginal decrease in sticker prices. However, many of these products are beyond the affordability of the mass market population.
- For casino and betting activities, the cost of participation has increased significantly. This is expected to discourage involvement to a certain extent.
- However, a massive cut in the GST rates for essential and standard goods is expected to cause significant savings for the masses. So, the net impact on consumption of “sin” goods and luxury items, once the rate cut comes into effect, remains indecisive.
Impact on Business:
- Higher GST rates on sin food items (e.g., high sugar drinks, caffeinated drinks) will impact consumer demand.
- A prohibitive GST rate on casino and betting activities will significantly dent demand.
- For luxury vehicles, costs can decrease marginally in a few segments. A flat 40% GST rate is lower than the previously charged 28% + 22% cess.
About the Author
AJ
As a qualified Chartered Accountant with extensive expertise in accounting, finance, taxes, and audit, I specialise in simplifying complex regulations for a broader audience. Well-versed in tax laws across India and the GCC region, I have a keen interest in the evolving finance ecosystem. Passionate about learning, I enjoy engaging in conversations, exploring new cultures through travel, and unwinding with music.. Read more