Alcohol and tobacco industries will have to pay more taxes towards an additional 'sin tax' under the proposed GST structure that seeks to bring in a uniform indirect tax regime across the country.
“We have kept a provision of having an additional tax for the sinful industries such as alcohol and tobacco,” a senior Finance Ministry official said.
However, the official did not specify the rate at which this tax would be levied under the proposed GST regime. 'Sin tax' is a globally prevalent practice under which products like alcohol and tobacco attract higher rates of tax. Typically, 'sin tax' is an excise tax that is levied on products and services considered to be bad for health or society such as alcohol, tobacco and gambling.
These additional taxes are also seen as efforts to discourage people from use of such products or services.
Besides, such taxes are often the most common measures by the governments to shore up their tax revenues as people generally refrain from opposition to such levies as they are indirect in nature and affect only their end users.