Archive · 21 Aug 2026
India’s Tobacco Tax Overhaul Leaves Bidis Behind, Authors Say
India changed the taxes on several tobacco products.
Cigarettes and some chewing tobacco products now face a higher GST rate.
But the tax on bidis, which are small tobacco rolls, was lowered.
Bidis are especially common among poor and rural people.
The authors say keeping bidis cheap can cause more illness and large medical bills for those families.
They also say bidi workers, many of whom are women, are paid poorly and lack strong workplace protections.
A study they cite found that higher bidi prices could help people live longer and raise more government revenue.
They want some of that revenue used for wages, training and support for bidi workers.
Their main recommendation is to tax bidis at the same level as other tobacco products.
India raised GST on cigarettes, pan masala, gutka and chewing tobacco to 40% but cut the bidi rate to 18%.
Bidis remain subject to a total tax burden of about 22%, compared with 66% for cigarettes.
The authors say roughly one-third of bidis avoid GST through the small-business exemption.
A modeled 30% bidi price increase could add an estimated 48 million years of life over 50 years.
The authors recommend taxing bidis like other tobacco products and using revenue to support workers.
- Who
- The Indian government, tobacco users, bidi workers and the authors Amit Summan and Rijo M John are involved in the issue.
- What
- India overhauled tobacco taxation but lowered the GST rate on bidis while increasing taxes on several other tobacco products.
- When
- The reform was announced on February 1; the article does not specify the year.
- Where
- India.
- Why
- The authors argue that low bidi taxes keep a harmful product cheap, worsen health and financial pressures on poorer households, and allow much of the industry to avoid taxation.
Case for higher bidi taxes
Main objections and concerns
Effect on poorer households
Case for higher bidi taxes
The authors argue that higher prices would reduce bidi use and protect low-income families from tobacco-related disease, medical costs and lost income.
Main objections and concerns
The standard objection is that higher bidi taxes would put additional financial pressure on the poor, who make up much of the bidi-smoking population.
Worker livelihoods
Case for higher bidi taxes
The authors say tax revenue could fund minimum-wage enforcement, skills training and welfare support for bidi workers, many of whom currently receive low pay and limited protections.
Main objections and concerns
The bidi industry employs several million people, mostly women rolling bidis at home, creating concern that taxation could threaten their livelihoods.
Tax treatment
Case for higher bidi taxes
The authors recommend placing bidis in the same 40% GST slab as other tobacco products, ending the small-producer exemption and increasing central excise duties.
Main objections and concerns
The current system maintains lower taxes for bidis and allows many small producers to remain outside the GST net; the article attributes this partly to the industry’s political influence.
- New GST rate
- Cigarettes, pan masala, gutka and chewing tobacco were moved to a 40% GST slab.
- Bidi GST rate
- The GST rate on bidis was reduced from 28% to 18%.
- Total tax burden
- The article says the total burden is 66% for cigarettes and 22% for bidis.
- Bidi consumption
- About 400 billion bidis are smoked each year, according to the article.
- Untaxed bidis
- Approximately 125 billion bidis—close to one-third of the total—escape GST through the small-business exemption.
- Modeled health benefit
- A 30% tax-driven bidi price increase combined with ending small-producer exemptions was modeled to add 48 million years of life over 50 years.
- Estimated revenue
- The proposed reform was modeled to raise roughly Rs 68 billion in bidi tax revenue in its first year.