I'm sure you're asking if Sin Tax applies to actual sin. Don't worry, we've got you covered.
A sin tax is a type of excise tax that is imposed on goods and services that are damaging to the environment, society, or health. Tobacco, alcohol, narcotics, gambling, and foods and drinks with high sugar content, to name a few.
The primary goal of the sin tax is to raise revenue.
- To make dangerous commodities more expensive in order to reduce their consumption.
- To make these harmful goods-producing industries pay greater taxes, which may be used to fund other welfare programmes.
- It's also a way for the government to make revenue.
- To avoid the high taxable amount, sin taxes may lead to criminal activities such as black marketing and smuggling.
- Critics contend that sin taxes give the government too much moral authority to tell citizens what they should and shouldn't do.
- Critics also believe that, while sin taxes may limit product purchases for a few years, people who are truly addicted to the habit may continue to buy.
- Because they discriminate against the poorer classes, sin taxes are sometimes referred to as regressive. The impoverished wind up paying a higher percentage of their earnings in taxes.
Why should you be bothered by it?
If your income is already being gnawed at by taxes, the addition of sin tax would be a pain in the neck. Both occasional and regular consumers of such goods and services will be affected equally by the taxed amount.
Few companies selling these products
► United Spirits Limited
Sin or excise taxes, unlike sales taxes, apply specifically to specified services or items. Sales taxes, on the other hand, are charged on all purchases with a few exceptions. A sin tax's purpose is to raise the price of a product or service in order to discourage behaviour that has a negative impact on society and individuals. The state and federal governments use the cash generated by sin taxes to fund a variety of projects that advance social and economic goals.
What did the budget 2022 say about the sin tax?
Nirmala Sitharaman, the finance minister, delivered her fourth budget for the financial year 2022-23 on Tuesday. Before the presentation of almost every budget, the stock market becomes anxious, fearing a hike in the sin tax.
But this year, the cigarette manufacturing businesses, particularly index heavyweight ITC, climbed up to 3.5 percent on the Bombay stock exchange as the government kept the taxation rates for sin products untouched.