GST Rate Simplification in India

India is revamping its Goods and Services Tax (GST) structure effective September 22, focusing on two main slabs: 5% and 18%, with an additional 40% bracket for "sinful" and ultra-luxury goods. This change aims to rationalize tax rates but raises concerns regarding public health and consumption patterns.

Key Changes in GST Rates

• Basic food items like pizza bread will move from 5% to zero tax.
• Sugar-based products such as chocolates and jams will be taxed at 5% instead of 12-18%.
• Aerated and sugar-based drinks will be subjected to a 40% tax.

Public Health Implications

While the GST changes are positioned as rational, they could undermine health-oriented consumption:

• Healthier options like sourdough bread may not be prioritized over less healthy options like refined flour bread.
• Reduced taxes on confectioneries conflict with strategies to combat non-communicable diseases (NCDs).

Food Regulation and Labelling

India's current food regulation lacks robust labelling, which is crucial for distinguishing between healthy and unhealthy foods:

• The Supreme Court has urged FSSAI to finalize labelling recommendations, preferring warning labels over health star ratings.
• Suggested labelling should follow WHO-SEARO or ICMR-NIN standards, focusing on specific thresholds for sugars, sodium, and fats.

Advertising and Consumption Behavior

Effective advertising regulation is needed to influence consumer behavior, especially among children:

• Current FSSAI regulations restrict HFSS food advertising near schools but lack broader time and platform-specific restrictions.
• India could model its approach after Chile, where "high in" products have advertising restrictions during peak child-viewing hours.

Recommendations for GST and Health Policy Alignment

To align GST with public health goals, the following steps are recommended:

• Implement mandatory "high in" warnings with category-specific, per-quantity thresholds.
• Tax products with "high in" warnings at higher rates (e.g., 18% or more), while compliant products are taxed at lower rates (e.g., 5% or less).
• Avoid discrepancies in taxing sugary foods versus drinks; all products exceeding "high in" thresholds should face higher taxes and advertising limits.
• Expand advertising restrictions beyond school-based contexts to include media platform limitations linked to FOPL status.
• Utilize sin-tax revenues for NCD prevention, labelling enforcement, and monitoring reformulation practices.

Ultimately, these measures aim to empower consumers to make healthier dietary choices amidst expanding access to various foods, preventing an increase in India's NCD burden.