The Swadeshi Jagran Manch (SJM), along with other trade associations, has criticized the proposal to impose a 35% GST on “sin goods” like tobacco and aerated beverages. They argue that this higher tax would lead to increased smuggling, loss of revenue, and harm small retailers while burdening consumers. The All India Consumer Products Distributors Federation (AICPDF) and the Indian Sellers Collective, which represents various trade bodies, also expressed concerns over the recommendations made by the Group of Ministers (GoM) regarding GST rate rationalization.
Earlier this month, the GoM, led by Bihar Deputy Chief Minister Samrat Chaudhary, proposed a 35% special rate for sin goods, including cigarettes, tobacco products, and aerated beverages. The GoM also suggested a review of tax rates on apparel. SJM’s Ashwani Mahajan criticized the idea of adding another GST slab, arguing that it would complicate the system and encourage smuggling, ultimately defeating the efficiency of taxation. Mahajan also reiterated that while the fight against tobacco was important, it required a more comprehensive approach.
He highlighted that high taxes on cigarettes have led to a booming black market, which would only grow with the introduction of this new tax rate. Mahajan pointed out that China benefits significantly from the smuggling of cheaper, more harmful cigarettes. There were also concerns raised about the health consequences of high taxes, as people might turn to more dangerous, cheaper tobacco products when legal options become unaffordable.
The AICPDF and Indian Sellers Collective also opposed the proposal, arguing that it would negatively impact small retailers, raise consumer costs, and encourage the black market. They urged the government to focus on simplifying GST compliance, reducing rates in a balanced way, and ensuring a stable business environment. Both organizations warned that the proposed changes could undermine the benefits of the GST system and cause lasting damage to India’s retail sector.
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