The tax structure now favours ultra-processed snack foods — with extruded or expanded products, savoury or salted — which have been moved from 12 percent to five percent GST.
Published Sep 04, 2025 | 8:32 AM ⚊ Updated Sep 04, 2025 | 9:01 AM
Processed food items in a supermarket.
Synopsis: The GST Council’s decision to reduce taxes on products known to contribute to lifestyle diseases creates a mixed approach to public health through fiscal policy. The comprehensive food sector changes include substantial tax cuts on items that health research has linked to obesity, diabetes, and other health complications.
While the GST Council’s food sector reforms bring relief to essential nutritious items, the same package significantly reduces taxes on products known to contribute to lifestyle diseases, creating a mixed approach to public health through fiscal policy.
The comprehensive food sector changes, effective from 22 September, include substantial tax cuts on items that health research has linked to obesity, diabetes, and other health complications.
The reforms slash GST rates on refined sugar products from 12 percent to five percent, making artificially enhanced sugar items significantly cheaper for consumers. Products benefiting from this reduction include refined sugar containing added flavouring or colouring matter and sugar cubes, which provide pure calories without nutritional value and are commonly used in confectionery and beverages.
Additionally, sugar-boiled confectionery, such as hard candies and similar sugar-based products, will see their tax burden reduced by more than half. These items contribute directly to increased caloric intake while offering no essential nutrients, potentially exacerbating India’s growing diabetes concerns.
The tax structure now favours ultra-processed snack foods — with extruded or expanded products, savoury or salted — which have been moved from 12 percent to five percent GST.
This category encompasses industrially processed snack foods created through high-temperature extrusion processes, which typically contain elevated levels of sodium, artificial flavours, and preservatives while offering minimal nutritional value.
Traditional Indian snacks are also benefiting from the same tax reduction, with namkeens, bhujia, mixture, chabena and similar edible preparations ready for consumption, pre-packaged and labelled, now taxed at just five percent.
While these products maintain cultural significance and are generally less processed than industrial alternatives, they remain high in oil content and salt, contributing to excessive caloric intake when consumed regularly.
Perhaps the most striking change for sugar-heavy products comes in the dessert category, where items previously taxed at 18 percent will now face only five percent GST.
Chocolates and other food preparations containing cocoa will become significantly more affordable despite their high sugar and saturated fat content.
Ice cream and other edible ice, whether or not containing cocoa, represent another category of high-calorie, high-sugar products receiving dramatic tax relief.
Similarly, pastry, cakes, biscuits and other bakers’ wares, whether or not containing cocoa, will be more accessible to consumers, despite these commercial baked goods often containing elevated levels of sugar, refined flour, and potentially harmful trans fats.
The reforms also move sugar confectionery, excluding traditional items like mishri and batasha, to the lowest tax bracket, making various candy and sweet products substantially cheaper for consumers across all income levels.
The policy extends favourable treatment to various processed food categories that offer limited nutritional benefits. Pasta, whether or not cooked or stuffed with meat or other substances or otherwise prepared, such as spaghetti, macaroni, noodles, lasagne, gnocchi, ravioli, cannelloni and couscous, will move from 12 percent to five percent GST, making these refined carbohydrate products more affordable despite their limited nutritional value.
Jams, fruit jellies, marmalades, fruit or nut purée and fruit or nut pastes, obtained by cooking, whether or not containing added sugar, also benefit from reduced taxation, though these products typically contain high levels of added sugars that contribute to excessive caloric intake.
The reforms further reduce costs for sauces and preparations — mixed condiments and mixed seasonings; mustard flour and meal, and prepared mustard, curry paste, mayonnaise and salad dressings.
Many products in this category contain elevated sodium levels, preservatives, and added sugars that can contribute to hypertension and other health complications when consumed frequently.
The reforms demonstrate clear recognition of certain harmful products through the implementation of punitive 40 percent GST rates.
Carbonated beverages of fruit drink or carbonated beverages with fruit juice now face increased taxation from 28 percent to 40 percent, reflecting the government’s understanding of these products’ contribution to obesity and diabetes.
Caffeinated beverages and pan masala have also been moved to the 40 percent tax bracket, acknowledging their potential health risks. Most tobacco products also face the maximum 40 percent rate, continuing the government’s aggressive stance against smoking-related products.
However, this creates an inconsistent approach where some sugar-heavy and ultra-processed foods receive tax relief while others face penalty rates, potentially confusing consumers about which products the government considers harmful to public health.
The simultaneous tax cuts on multiple categories of nutritionally poor foods could potentially increase consumption of sugar-laden products among price-sensitive consumers. When governments reduce taxes on ultra-processed snacks and high-sugar desserts, these items become more affordable to children and families who make purchasing decisions primarily based on cost.
This pricing strategy may counteract broader public health efforts to reduce consumption of high-calorie, low-nutrition foods. The policy changes could send mixed messages about government priorities regarding public health, particularly when contrasted with the clear “sin tax” approach applied to carbonated beverages and tobacco products.
The reforms reveal a contradictory approach to health-focused taxation. While the government clearly recognises the harmful nature of carbonated beverages through a 40 percent tax, it simultaneously provides relief to other categories that contribute to similar health problems.
Sugar products receive cheaper access despite their direct contribution to diabetes risk, while ultra-processed snacks become more affordable despite established links to obesity and cardiovascular disease.
High-sugar desserts receive some of the most substantial tax cuts in the entire reform package, moving from 18 percent to five percent GST. This treatment seems inconsistent with the aggressive taxation applied to carbonated drinks, particularly since both categories contribute to excessive sugar consumption and related health complications.
The GST reforms successfully achieve the goal of making nutritious basics like milk, nuts, and traditional breads more affordable for Indian families. However, they simultaneously reduce the cost of products that contribute significantly to India’s growing burden of lifestyle diseases, including diabetes, obesity, and cardiovascular conditions.
The policy appears to prioritise making food generally more affordable over using taxation as a tool to guide healthier consumption patterns. This approach works effectively for clearly beneficial products like dairy and nuts, but creates potential problems when applied uniformly to categories that include both traditional and ultra-processed options.
(Edited by Muhammed Fazil.)
