Union Budget 2026 | FAQs: What is sin tax?

Finance Minister Nirmala Sitharaman will present the Union Budget on Sunday, February 1, at 11 am. This will be her ninth consecutive budget presentation.

Ahead of the approaching Budget, let's break down some of the terminology associated with the exercise. 

What is sin tax?

Sin tax is a substantial levy imposed on products such as tobacco, alcoholic beverages, gambling, etc., aiming to discourage their consumption among the public. It is perceived as a beneficial strategy from the government's perspective.

India has been imposing hefty taxes on items like cigarettes, liquor, and pan masala substances. These taxes serve a dual purpose - firstly, dissuading people from consuming what is perceived as undesirable and secondly, the companies manufacturing these products bear a significant tax burden.