40% GST On Cigerettes But Only 18% GST On Bidis, Why Two Tobacco Products With Different GST Slab?

In the latest development, the GST council meet has revised rates on tobacco products to reduce consumption. Itmes including tobacco such as pan masala and cigarettes, now fall under a steep 40% GST slab, bidis remain an exception. And this raises question, WHY? 

The Council decided to reduce GST on bidis from 28% to 18%. At the same time, the tax on bidi wrapper leaves, also called tendu, dropped from 18% to 5%. The government confirmed that these changes aim to balance public health concerns with the rural economy, which depends heavily on bidi manufacturing and wrapper collection.

Rural Economy and Women Workforce in Bidi Industry

Government data shows 49.82 lakh registered bidi workers across India, mainly in small towns and villages. Research by Frontiers highlights that the workforce is overwhelmingly female, with nearly 90% of home-based bidi-making done by women.

In rural areas, families combine bidi rolling with farm work and childcare, making it a major source of income. However, wages remain extremely low.

A 2023 British Safety Council report revealed that bidi workers earned only 17% of the wage of an average registered manufacturing worker in 2010–11. The report noted that bidi wages remain meagre despite the large workforce.

Reports Highlight Low Wages for Bidi Workers

In West Bengal, workers reportedly earn about Rs 150 for producing 1,000 bidis. 

These numbers highlight why the GST Council considered rate cuts. Officials said lowering taxes on bidis could help protect fragile household earnings in weak rural cycles, even though cheaper bidis may increase consumption.

The rate relief also aims to secure livelihoods tied to bidi-making across several states.

The GST Council also reduced the tax on tendu leaves, the key wrapper material for bidis, from 18% to 5%.

It must be noted that Tendu leaves are a minor forest product collected by lakhs of adivasi and rural households across central India. Lowering GST on tendu reduces input costs for bidi makers without altering the final tax on the product itself.

Officials said this change supports forest-based livelihoods that remain highly fragile and seasonal. With bidi-making tied to both agriculture and forest collection, the government sought to protect incomes at multiple levels of the supply chain.

Currently, rates on pan masala, gutkha, cigarettes, chewing tobacco, unmanufactured tobacco, and bidis will continue at existing GST and cess rates. Officials explained that the decision links directly to clearing outstanding loan and interest payments from the cess account. 

(Inputs Taken From Other Media)

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