Tobacco use is the leading cause of cancer and death from cancer. In a move to reduce the consumption of tobacco products, the Ministry of Health sought to tax all these products, including bidis, at 28% and impose a higher rate under the new GST regime.
The ministry, which promoted higher taxes on all tobacco products for a long time, also stressed that the phased tax structure of cigarettes should be removed as these slabs are open to handling for substitution and promotion of products.
In welcoming the approach taken by the Ministry of Finance to preserve soft drinks, tobacco products, luxury cars and pan masala in the "demerit goods" category, the Ministry of Health suggested that the levy collected from The GST should be high enough to make these products unaffordable over a period of time.
In an office memorandum issued by the Ministry of Health recently, he suggested that exemptions from high taxation standards should not be extended to low-turnover industries, such as bidi manufacturers, as this would allow them to Manipulate standards.
"By taking advantage of this exemption, bidi manufacturers closed larger units and began to produce small-scale under different names in a clandestine manner, resulting in enormous tax bankruptcies," the memorandum said.
Last year, in February, Health Minister JP Nadda also wrote to finance Minister Arun Jaitley, emphasizing the need to impose a tax on sin or a health abatement on demerit products such as Tobacco products and soft drinks. Nadda had also suggested considering a proposal to affect the proceeds of the additional surtax to finance health schemes such as the Rashtriya Swasthya Bima Yojna.
