Saturday, April 04, 2026

Taxing sins.

"India's economic outlook remains supported by strong domestic demand and improving high-frequency indicators, but rising geopolitical tensions, particularly in the Middle East, pose significant risks, including possibility of stagflation, according to a report by Morgan Stanley." ET. "India's net Goods and Services Tax (GST) collections rose to Rs 1.78 trillion in March 2026, registering a growth of 8.2% compared to the same period last year, as per official data." Gross GST collections grew 8.8% to Rs 2 trillion. "For the full financial year 2025-26, gross GST collections rose 8.3% year-on-year to over Rs 22.27 trillion, while net GS revenue grew 7.1% to Rs 19.34 trillion." ET. Starting on 22 September 2025, GST rates were reduced to 5%  from 12% on a range of commonly used goods and to 18% from 28% on automobiles, air conditioners, televisions and washing machines. cleartax.in. If collections have increased despite lower rates, it means that demand and sales have surged. Unfortunately, fruit juices, non-alcoholic beverages and carbonated beverages continue to be taxed at 40%. "India's taxation for non-alcoholic beverages stands out as one of the most onerous in the world." "The median global tax rate for carbonated beverages hovers around 18.4%." Also, at 351.9 million tonnes, India had the second largest horticultural production in 2022-23, so lower taxes would increase demand for fruit juices, wrote Aruna Sharma. All these drinks are treated as 'sin' products possibly because, "India is among the top three countries globally with the highest number of children affected by excess weight, with about 41 million aged 5-19 living with high body mass index (BMI), including nearly 14 million with obesity." "The rise is being driven by easy access to calorie-dense foods, sugary drinks and ultra-processed products, along with declining physical activity and increasing screen time." TOI. "A debate around banning social media for children under 16 is gathering momentum in India," as Australia has done, but "Experts, however, warn that such a ban would not be easy in India and could face legal challenges." BBC. Municipalities have to arrange easily accessible playing grounds and swimming pools for children to exercise in. India's middle class is becoming poorer. "A family that lived comfortably on Rs 1 million in 2016 would now need close to Rs 2 million a year." As prices have surged, "Their salary, in most cases, has barely moved. The middle class is on a treadmill, and every year the belt speeds up." BBC. Poverty has a strong indirect relation to obesity in developed countries (Medical News Today) but this phenomenon is now being seen in low and middle income countries as well. As salaries stagnate, both parents have to work to continue the same standard of living, so there is no time to cook. It is easier to order junk food online. What is a greater sin - non-alcoholic beverages, social media, tasty calories without nutrition, or falling salaries? Who should we ask? Government, priests or people. Difficult.            

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