The idea to impose a 35% GST on “sin goods,” including as tobacco and aerated beverages, has drawn criticism from the Swadeshi Jagran Manch (SJM) and other trade groups. They contend that in addition to burdening customers, this additional tax will promote smuggling, reduce revenue, and hurt small merchants. Concerns were also raised by the Indian Sellers Collective, which comprises a number of trade associations, and the All India Consumer Products Distributors Federation (AICPDF) over the Group of Ministers’ (GoM) suggestions for rationalizing the GST rate.
A 35% special charge for sin items, like as cigarettes, tobacco products, and aerated beverages, was recommended earlier this month by the GoM, which was headed by Bihar Deputy Chief Minister Samrat Chaudhary. The GoM also recommended that the tax rates on clothing be reviewed. Ashwani Mahajan of SJM opposed the proposal to create an additional GST bracket, claiming that doing so would make things more difficult and incite smuggling, which would eventually undermine the effectiveness of taxes. Mahajan also reaffirmed that although the battle against tobacco was crucial, a more all-encompassing strategy was needed.
He emphasized that a thriving black market has resulted from high cigarette rates, and that this increased tax rate will simply fuel its growth. Mahajan noted that the smuggling of cheaper, more dangerous cigarettes greatly helps China. High tariffs have also sparked worries about the potential health effects, as consumers may resort to less expensive, riskier tobacco products when legal alternatives become prohibitive.
The idea was also opposed by the Indian Sellers Collective and the AICPDF, who said that it would boost consumer costs, hurt small shops, and promote the illicit market. They called on the government to prioritize making GST compliance easier, lowering rates in a fair manner, and maintaining a stable business climate. Both groups cautioned that the suggested modifications would negate the advantages of the GST system and harm India’s retail industry for years to come.
