GST Reforms 2.0: Why Have Bidis Attracted an 18% Tax, Unlike Other Tobacco Products?

The Goods and Services Tax (GST) Council has recently made changes to tax rates on various tobacco products. While most items like cigarettes, pan masala, and chewing tobacco are now placed under a higher 40% tax slab, bidis have surprisingly seen a reduction in tax.

Govt Reduces GST on Bidis to 18%

Earlier, bidis attracted a GST rate of 28%. Now, that rate has been reduced to 18%. Along with this, the tax on tendu leaves (which are used to roll bidis) has been cut from 18% to just 5%. This change comes even as other tobacco products continue to be taxed heavily.

Why This Special Treatment for Bidis?

The main reason is the rural economy and the people who make bidis. According to government data, there are around 49.82 lakh registered bidi workers in India, most of whom live in small towns and villages.

Research shows that 90% of bidi workers are women, and most of them work from home. They often fit this work around house chores, farming duties, and childcare. For many families in rural areas, bidi-making is an important source of cash income, even if the pay is very low.

A report by the British Safety Council noted that in 2010–11, a bidi worker earned just 17% of what an average factory worker made. In West Bengal, workers are often paid ₹150 for every 1,000 bidis. With many workers making around 400–700 bidis per day, the daily income remains quite low.

Reducing the tax on bidis may help protect these low earnings, especially when the rural economy is going through a rough phase. Cheaper bidis may lead to higher sales, which in turn may help workers earn more.

Relief for Forest Dwellers

The tax cut on tendu leaves also supports forest-based livelihoods. These leaves are collected by lakhs of tribal and rural families in central India. Lowering GST here reduces costs for bidi manufacturers, helping the entire supply chain, from forest gatherers to home-based rollers.

Read more: GST Reform: Roti, Cancer Drugs, and Classroom Supplies Turn GST-Free from Sept 22.

Conclusion

While the government aims to reduce tobacco use by increasing taxes on most products, the lower GST on bidis shows a different priority — protecting rural livelihoods. The move supports millions of women and families who depend on bidi-making for survival. However, it also raises questions about public health, as lower prices might lead to higher consumption of bidis in the long run.

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