Levy GST based on nutritional levels of food products: WHO

January 16, 2024 by No Comments

World Health Organization (WHO) has called for the introduction of a nutrition-related taxation system for ultra-processed food in India. The World Health Organization has suggested that GST rates be tied to the nutritional content of food products. The WHO-ICRIER report (Indian Council for Research on International Economic Relations), released this week, analyzes the trends and issues in the ultra-processed foods manufacturing sector in India.

The WHO has proposed that financial incentives and subsidies for food producers be linked to their nutritional quality. According to the WHO, this move would encourage manufacturers to produce more healthy foods, and higher taxes could lead to a decrease in the consumption of unhealthy food.

There is no incentive to produce or consume healthy food

The report also states that because there is no nutrition-related taxation, all companies lobby for their products to be placed in the lowest GST tax brackets regardless of their health quotient.

The report states that “tax policies should be carefully designed with the highest tax slabs for foods high in fat (or trans-fats), sugar and salt (HFSS), and the lowest for reformulated and healthier products, so as to discourage the consumption of HFSS and guide people towards healthier eating habits.”

Taxation policies must be designed to give the highest tax slabs for foods that fall under the High Fat Sugar Salt (HFSS). Food Safety and Standards Authority of India will announce the HFSS category. Foods such as cakes, sweet biscuits, pastries, doughnuts, etc., are classified as HFSS.

It has also recommended that producers of healthy foods be provided with financial assistance to cover their production costs and to encourage more people to enter the market. The WHO has also suggested export incentives for foods that are in high demand abroad.

The report says that “While export-linked incentive cannot be directly given, they can be cleverly designed to support the production.”


As it stands, there is no unifying logic for the different tax slabs. As an example, the GST on chocolate is higher than that of sugar confectionery. All namkeens (salty snacks) have the same 12 percent tax rate regardless of their salt content. All sugary carbonated beverages are subject to a 40% tax, irrespective of their sugar content (including those that contain zero sugar).

Financial regulations for ultra-processed food have three goals.

In the report, it is stated that the GST council must link its tax structure with the HFSS product definitions once FSSAI has announced the HFSS products. The WHO has called on manufacturers to receive financial subsidies and taxation related to nutrition in order to achieve three goals.

  1. Encourage manufacturers to produce healthier products for consumers.
  2. Healthy products should be easily accessible to consumers.
  3. Encourage the production of healthy food products.

The report also gives examples such as the special consumption tax levied in Portugal on sugar drinks, the taxation of packaged food and beverages in Hungary (2011), and the Junk Food Tax (2014) on food that has more than 275 calories per one hundred grams. These are all examples of financial regulations that have successfully shifted the consumption pattern of ultra-processed food.

Experts say that financial regulation without awareness won’t work

According to the report, the ultra-processed foods sector grew with a compounded annual rate of growth of 13.37 percent from 2011 to 2021 despite the brief slowdown caused by the pandemic. The retail sales volume share declined from 47.7 % in 2011 to 46.1% in 2021.

“Excessive consumption of ultra-processed food is associated to multiple health conditions, primarily because preservatives are added during the manufacturing process,” said Dr Sayan, Senior Consultant in Radiation Oncology at Apollo Cancer Centre, Kolkata. He adds that the WHO has already classified some additives in ultra-processed foods as ‘potential carcinogens.’

He adds that the most recent example is Aspartame – an artificial sweetener found in carbonated beverages instead of sugar.

Dr Paul argues that if the public is not aware of the dangers of ultra-processed food items, financial and taxation regulations may not be effective. He believes that rules are good, but the public needs to be educated on why ultra-processed food is unhealthy.

“Basically, it’s a combination between government regulations and public awareness,” says Dr. Paul.

Dr. Banshi Saboo, Diabetologist, Chair-elect (South Asia), International Diabetes Federation(IDF), has also expressed a similar view and added that financial regulations would not be enough.

“If the people don’t know why the price has gone up, it won’t have the desired effect in the long term. The people should be aware that this is bad for their health. “On the other hand, the proposal to provide financial assistance to producers of healthy foods should be welcomed,” adds Dr Saboo.

Lenin Raghuvanshi is a food safety activist and the CEO of the People’s Vigilance Committee on Human Rights in Uttar Pradesh. He says the government should be more focused on food labels and provide more clarity on nutrients and contents found in packaged food.

Food labels with clear warnings would be more effective. The government must immediately mandate that unhealthy food products have prominent warnings, just as they did with tobacco. Raghuvanshi says that if there is a proposal to tax food based on nutrition, then the government should use the money generated to promote better health among the people.


  • WHO proposes that nutrition-related taxation be implemented
  • This suggestion is one of the recommendations to improve the health quality of ultra-processed food
  • Proposed incentives include financial rewards for producers of healthy food products.
  • Experts suggest that financial regulation without proper health education among the people may have limited success.

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