The recent GST reforms have brought changes in the taxation of tobacco products across India. While the prices of cigarettes, pan masala, gutkha, and other tobacco products are set to rise, bidis will actually become slightly cheaper. The GST on bidis, which was earlier 28 per cent, has been reduced to 18 per cent. Similarly, the GST on tendu leaves used to make bidis has been lowered from 18 per cent to 5 per cent.

In contrast, cigarettes and other tobacco products, which currently attract 28 per cent GST, will see an increase to 40 per cent under the new rules. The reduction in GST on bidis is largely aimed at protecting the domestic bidi industry, which employs over 70 lakh people in India. However, the move has generated confusion and criticism on social media.

Political motive

Many users have questioned why cigarettes, which are widely recognised as harmful, are being taxed more, while bidis, which are considered more dangerous and are mostly consumed by underprivileged sections of society, are seeing a tax cut. Some have also speculated that the move may be politically motivated, as Bihar is set to hold Assembly elections soon.

Several social organisations, including those linked to the RSS, had earlier appealed to the government to reduce the GST rate on bidis. The Swadeshi Jagran Manch argued that the 28 per cent GST had negatively affected employment in the registered bidi sector and caused difficulties for workers in unregistered production units. In the past, bidis were subject to a small central excise duty, and many states did not levy sales tax on them, partly to protect the livelihoods of bidi workers.

The government has clarified that the new GST rates will come into effect from September 22. However, the sale prices of cigarettes, pan masala, gutkha, bidis, and other tobacco products will remain the same until outstanding loans and compensation cess obligations are cleared. Overall, the move is being seen as a balance between raising revenue through higher taxes on cigarettes and supporting employment in the domestic bidi industry.