GST On Bidis Drop To 18% But Cigarettes And Gutkha Rises To 40%. Here's Why

While prices of cigarettes and other tobacco products, such as Gutkha, are set to rise after the GST reforms announced yesterday, the humble bidi will see a marginal drop in prices. The GST on bidis, which was previously 28 per cent, has been reduced to 18 per cent. The GST on tendu leaves used to make bidis has been reduced from 18 per cent to 5 per cent. Cigarettes and other tobacco products, which currently attract 28 per cent GST, will now be dearer after the reforms that have hiked the tax to 40 per cent.

The GST cut on bidis appears to be aimed at protecting the domestic bidi industry that employs over 70 lakh people. But the move has stumped social media users who have asked if cigarettes are harmful, but bidis are not. Some have linked it to the upcoming Assembly polls in Bihar. Many have pointed out how bidis are more harmful than cigarettes and are consumed mostly by the underprivileged sections of society, making them vulnerable to serious ailments. There have been sarcastic takes too, with some saying the GST cut for bidi shows the Centre is working for the masses.

Earlier, several social organisations, including those linked to the BJP's ideological parent RSS, had urged the government to reduce the 28 per cent GST rate on bidis. This, they argued, will aid workers.

The Swadeshi Jagran Manch, which is linked to RSS, wrote to Finance Minister Nirmala Sitharaman that the 28 per cent GST has hit employment in the registered sector of bidi manufacturing. This has also caused hardships for workers in unregistered beedi production units, the Manch said.

In the past, a small amount of central excise duty was levied on bidis, the Manch said, adding that several states did not even levy sales tax on bidis, keeping the interests of beedi workers in mind.

While the changes in GST rates will kick in on September 22, cigarettes, pan masala, gutkha, bidi, and other tobacco products will continue to be sold at the same rate till loan and interest payment obligations under the compensation cess account are discharged, the government has said.