Winning Bizness Desk
Mumbai.The GST Council in its 56th meeting decided to lower the Goods and Services Tax on bidis. Finance Minister Nirmala Sitharaman announced on September 3 that the rate on bidis would be reduced from 28 percent to 18 percent, while tendu leaves used for making bidis would attract only 5 percent tax instead of 18 percent. On the other hand, cigarettes and other tobacco products will now face a higher GST of 40 percent, up from the earlier 28 percent.
Employment linked to bidi industry
The move is seen as an attempt to support the country’s traditional bidi industry, which provides employment to more than 70 lakh people. For many of them, especially women and rural workers, bidi-making remains the only source of livelihood. By lowering the tax burden, the government appears to be protecting jobs in this sector while raising taxes on cigarettes and other tobacco products, which are mostly consumed in urban and semi-urban areas.
Social groups demanded GST cut
Several social organizations had previously urged the government to reduce GST on bidis. The Swadeshi Jagran Manch, for instance, had written to the Finance Minister stating that 28 percent GST had badly affected registered bidi manufacturing units and their workforce. They argued that this forced many workers into unregistered units where working conditions and wages are worse. Before GST, bidis were subject to minimal central excise duty and were exempted from sales tax in several states, keeping them affordable and ensuring that bidi workers were not harmed financially.
Mixed public reactions and health concerns
The announcement triggered a wide debate on social media. Some questioned why the government considered cigarettes harmful but not bidis, even though medical experts say bidis are equally or more dangerous to health. Concerns were raised that reducing tax on bidis, consumed mostly by the poor, would worsen public health challenges. Others suggested the decision was linked to the upcoming Bihar Assembly elections, where bidi consumption is widespread. Some users joked that by reducing GST on bidis, the government was trying to show its concern for common people.
A balancing act of politics and economy
The government’s move reflects a balancing act between safeguarding employment and addressing health issues. While increasing tax on cigarettes is seen as discouraging consumption, lowering GST on bidis gives economic relief to millions of poor workers. However, critics argue that the long-term health risks of bidis outweigh the short-term employment benefits. With elections around the corner, the timing of the decision has further fueled speculation about its political motives.
Summary pointers:
1. GST on bidis cut from 28 percent to 18 percent.
2. Tendu leaves tax reduced from 18 percent to 5 percent.
3. Cigarettes and other tobacco products GST raised to 40 percent.
4. Bidi industry employs over 70 lakh people in India.
5. Social groups earlier demanded lower GST to protect workers.
6. Public divided, many say bidis are equally harmful.
7. Decision linked by some to upcoming Bihar elections.
