Question

Give two examples of Sin Tax.

Hint:

Sin tax is charged on harmful goods like tobacco and alcohol to discourage their use.

Answer 1

Step 1: Meaning of Sin Tax.
A sin tax is an extra tax charged on goods and services that are harmful to health or society. The aim is to reduce their use and also to raise revenue for the government.

Step 2: First example - Tobacco products.
Cigarettes, gutka and other tobacco products are taxed at very high rates. They cause cancer and other diseases, so the government wants people to use less of them. In GST they also attract compensation cess.

Step 3: Second example - Alcohol.
Liquor and other alcoholic drinks are taxed heavily by the States through excise duty and VAT. Heavy drinking harms health and society, so the tax is kept high.

Step 4: Other examples (for reference).
Gambling, casinos and aerated sugary drinks are also taxed at the highest rates.

Final Answer:
Two examples of sin tax are tax on tobacco (cigarettes) and tax on alcohol (liquor).