Why in News
- From 22 September 2025, India will implement GST 2.0 with a simplified structure:
- Two main slabs: 5% and 18%.
- A special 40% “sinful/ultra-luxury” bracket.
- Many everyday foods (pizza bread, confectionery, chocolates, jams, jellies) will shift to lower tax slabs (5% or zero).
- Aerated and sugar-based beverages will move to the 40% bracket.
- Concern: While simplifying GST, these changes may undermine public health goals by making unhealthy foods more affordable.
Relevance : GS III (Economy – Tax Policy, Public Health, Nutrition Security, Non-Communicable Disease Prevention).
From Basics
- GST Basics:
- Introduced in 2017 → “One Nation, One Tax” indirect tax reform.
- Prior slabs: 5%, 12%, 18%, 28% (+ cess).
- GST 2.0 → rationalised to 5% and 18%, with 40% sin tax for harmful/luxury goods.
- Non-Communicable Diseases (NCDs) in India:
- Account for ~65% of deaths (WHO, MoHFW data).
- Diet-related risk factors: high sugar, salt, fat consumption → obesity, diabetes, hypertension, cardiovascular disease.
- Front-of-Pack Labelling (FOPL):
- Proposed by FSSAI in 2022, still not finalised.
- Supreme Court (July 2025): ordered FSSAI to finalise norms within 3 months.
- Debate: Health Star Rating vs “High-in” Warning Labels.
- WHO-SEARO’s Nutrient Profile Model (NPM): recommends category-based cut-offs for sugar, sodium, fats.
- Advertising Rules (Current):
- HFSS foods banned near schools (FSSAI 2020).
- CCPA 2022 → restrictions on misleading ads.
- ASCI 2024 → expanded disclosure norms.
- Still no comprehensive HFSS advertising regulation comparable to Chile or UK.
Comprehensive Overview
Positive Aspects of GST 2.0
- Simplification of structure → reduces compliance burden.
- 40% sin tax on aerated drinks → aligns with global best practices.
- Studies (Asia, Africa) show 2.5–19% consumption decline after sugar taxes.
- Can nudge reformulation of sugary drinks if linked with labelling and ad restrictions.
Public Health Concerns
- Unhealthy foods becoming cheaper:
- Pizza bread (including maida-based) exempted.
- Chocolates, jams, confectionery moved to 5%.
- Mismatch in taxation: sugary beverages penalised, but sugary foods incentivised.
- Risk of substitution: adolescents may shift from taxed beverages to untaxed sugary snacks.
Weakness in Regulatory Ecosystem
- Food Labelling Gaps:
- Without mandatory FOPL, consumers can’t differentiate healthy vs unhealthy products.
- “Per serving” labels misleading → need per 100g/ml thresholds.
- Advertising Gaps:
- No restriction on HFSS ads across TV, social media, print.
- Chile’s model (ban on child-directed advertising of “high in” foods) more effective.
Policy Corrections Needed
- Link GST with FOPL:
- Products breaching “high in” thresholds → taxed 18% or higher.
- Compliant products → taxed 5% or lower.
- Mandatory Warning Labels:
- Adopt WHO-SEARO or ICMR-NIN thresholds.
- Apply per-quantity norms to avoid loopholes.
- Stronger Ad Regulation:
- Ban ads for “high in” products to children.
- Restrict ad slots during peak child-viewing hours.
- Use of Sin-Tax Revenues:
- Redirect to NCD prevention, labelling enforcement, reformulation incentives.
Long-Term Implications
- If uncorrected, GST 2.0 could increase NCD burden, straining healthcare.
- Integrated approach needed: Tax Policy + Labelling + Advertising Regulation.
- India can set a global example by aligning fiscal and health policies.
