Indian Tobacco and Sugar-sweetened Beverages GST Rate Hike

• The Group of Ministers (GoM) proposes a higher GST rate on tobacco and sugar-sweetened beverages from 28% to 35%.

• The hike is expected to reduce tobacco consumption and boost tax revenues.

• Preliminary estimates suggest a 5.5% price increase, a 5% drop in consumption, and an 18.6% revenue rise for beedis.

• Cigarette prices would increase by 3.9%, consumption decline by 1.3%, and revenue grow by 6.4%.

• Smokeless tobacco prices would rise by 3%, consumption drop by 2.7%, and revenue increase by 1.9%.

• The proposed GST hike falls short of the 40% peak rate allowed under GST law.

• WHO FCTC recommends comparability of all tobacco products to prevent substitution.

• Balancing GST and excise taxes is crucial.

• The government should consider introducing additional health-focused levies.