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Government earned an additional Rs 70 billion for its ‘sin’, this is the story of Sin Tax

Sagar Patel

By Sagar Patel

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Your hobbies, government income.

“The hobby is something very important…” Now the government also seems to say the same thing. The reason for this is also clear. The extra income the government gets from your hobbies. This amount is also not small, but amounts to Rs 70,000 million. In the language of economics, the extra tax the government earns from your ‘hobby’ is also called the Sin Tax.

The sin tax is generally levied on pan masala, liquor, cigarettes, carbonated drinks, cold drinks, expensive perfumes, imported goods and vehicles. This is a kind of “luxury” tax. Although Sin means ‘sin’ in Hindi. In such a situation, whether spending on these things is really a “sin” or not depends on the individual. The government collects it as a luxury tax.

Recovery as GST tax

When the GST system was introduced in the country in July 2017, the highest tax bracket remained at 28 per cent. But for “sin goods” or “luxury goods” a separate tax of up to 15 percent was imposed. The purpose of imposing this tax was that the money from this item would compensate for the loss of revenue of the states, which is likely to occur due to the implementation of the GST.

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Now this Sin Tax has become a goose that lays “golden eggs” for the government. The government is receiving so much money from this that even after meeting all expenses and repaying loans from states, it will be left with an additional Rs 70,000 crore.

The loan will be repaid early.

The central government had sought loans on behalf of the states during the Covid-19 crisis. The deadline for repayment of most of these loans is March 2026. ET quoted a senior government official as saying that as per the GST tax collection trend, the government will repay all loans ahead of time, even then the government will keep between Rs 65,000 and 70,000 crore.

Government budget figures also attest to this claim. The government’s GST tax collection in the financial year 2020-21 was Rs 85,191.9 crore. Then it will be Rs 1,05,000 crore in 2021-22, Rs 1,25,862.40 crore in 2022-23 and Rs 1,45,000 crore in 2023-24. While in the financial year 2024-25 it is estimated at Rs 1,50,000 crore.

Cessation discussed at GST Council meeting

When the GST was implemented, the cess system was imposed only for a fixed period. This GST exemption period will end in March 2026. In such a situation, in the 53rd GST Council meeting on Saturday, there may be a discussion on what should be done with GST Cess in future. How to use the money received under this concept.

Sagar Patel

Sagar Patel

I am Sagar Patel, specializing in business news reporting. With a keen focus on economic trends, market analysis, and corporate developments,

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