Sin Tax is a type of tax which is levied on products like alcohol and tobacco which are usually considered bad for health. This type of tax is prevalent in many other countries to finance projects.
At the moment, there are reports that a commitee formed for recommendations of the GST Bill, has suggested a 40 per cent tax on Sin Tax in the GST.
The Finance Ministry is currently seeking inputs from the industry and other stakeholders at national, state and local levels on the Goods and Services Tax (GST) law, reports PTI.
In 2014, Singapore increased tax on tobacco, alcohol and gambling which was used to fund the healthcare subsidy.
Why Sin Tax should be introduced in India?
By making such things expensive it is expected to discourage individuals to use such products. Also, individuals indulging in alcohol or tabacoo can be a headache to the society.
The other reason to do so is it will help to boost up revenue collection to the government. The revenue generating can be used to aid many projects which are in need of funds.
How does it impact?
Sin tax is only applicable to individuals who are interested in such products and have to shed more on the same product.
High-end products are usually consumed by wealthy people and may also affect the poor.
There are chances that it may encourage smuggling and blackmarket. Or individuals may shift to cheaper products.
Sin Tax in GST
There are reports that the government is consider imposing Sin tax on industries like alcohol and tobacco. While the rate at which it is applicable is not specified, there is a recommendation that it could be 40%.
GST will be finalized after considering comments and suggestions from the industry. If the GST bill is approved, it will be one of the biggest tax reforms in the country.