There is a warning written on the cigarette packet that smoking it can be fatal. But despite this people drink it. But smoking cigarettes will become expensive from next month. The central government is now going to increase the excise duty on cigarettes. The government has issued its notification. Excise duty on cigarettes will come into effect from February 1.
The central government will now impose excise duty ranging from Rs 2,050 to Rs 8,500 on every 1,000 sticks of cigarettes. Different excise duties will be imposed according to the size of the cigarette.
This excise duty on cigarettes GST Apart from this, it will be applied from above. 40% on cigarettes GST It will be charged and excise duty will also be charged on top of it. Due to this, cigarettes can become expensive.
Currently, 28% on cigarettes GST Seems like Besides, compensation cess is also levied. in July 2017 GST The tax on cigarettes has remained the same since its implementation. Now after 8 years the tax on cigarettes has been increased.
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But why was this done?
still on cigarettes GST Apart from this, compensation cess was also levied. But now the compensation is about to end. last September GST Council imposed 40% tax on cigarettes and paan-tobacco GST Approval was given for installation. But it could have become cheaper after the compensation cess is abolished.
While presenting the bill to impose excise duty on cigarettes, Finance Minister Nirmala Sitharaman had said in Parliament last month that after the abolition of compensation cess, only 40% GST would have remained the same, due to which these things would have become cheaper.
He had said that due to cheapness of cigarettes and paan-tobacco, their consumption would also increase, which is harmful for people’s health. Besides, the revenue received by the government would also reduce.
Now there will be no cess on cigarettes but 40% GST Along with this, excise duty will also be imposed.
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Why was it necessary to do this?
- No tax increase for 7 years: GST Before its implementation, excise rates on cigarettes were increased every year in India. But no new tax was imposed on cigarettes for the last 7 years. Whereas, in more than 80 countries of the world, taxes on cigarettes and tobacco products are increased every year, so that their consumption can be reduced.
- Compensation cess ends on 31 January: When GST 28% on cigarettes if implemented GST Apart from this, compensation cess was also imposed. This cess used to be up to 60%. But compensation cess is ending on January 31. In such a situation, cigarettes should not be cheap, so that 40% GST Along with this, separate excise duty will be imposed.
- Health and revenue both important: If this excise duty was not imposed, the government’s revenue would have reduced due to the abolition of compensation cess. Along with this, as cigarettes became cheaper, their consumption would increase, which would have a negative impact on people’s health. Finance Minister Nirmala Sitharaman had said, ‘We cannot allow it to become cheaper and lead to loss of revenue.’
- Lowest tax in India: World Health Organization (WHO) Says that cigarettes and tobacco should be taxed at least 75% of their price. WHO According to , currently in India only 53% of the price of cigarettes is taxed. Whereas, countries like UK and Australia impose 80-85% tax on cigarettes. Even in most European countries it is up to 75-80%.
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It was necessary to impose tax also
WHO It is said that every year more than 80 lakh people around the world die due to cigarette smoking. At the same time, there are 10 lakh deaths in India. If deaths caused by other tobacco products are also added to this, then this figure reaches 13 lakhs.
According to the report of ‘The Tobacco Atlas’, there are more than 13 crore people in India who smoke. More than 90 percent of them are men. Not only this, 1.6% boys and 1.1% girls aged 10 to 14 also smoke. This shows that smoking is now becoming common even at a young age.
WHO says that taxing tobacco is the most cost-effective way to reduce its consumption, especially among youth and low-income people. A 10% tax increase reduces tobacco consumption by about 4% in high-income countries and by about 5% in lower- and middle-income countries.
WHO Says that despite this, not much tax is imposed on tobacco. 12% of the population lives in 41 countries of the world but here tax on tobacco products is less than 75% of the retail price.
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Will this increase smuggling?
The government believes that increasing taxes will help in reducing cigarette consumption. However, people associated with the tobacco industry say that this will increase smuggling of illegal cigarettes.
Tobacco Institute of India (TII) Has appealed to the government to reconsider this tax. TII Said in a statement that due to increase in tax, lakhs of farmers, MSME, Shopkeepers and industries will suffer huge losses. Besides, it will also give a big boost to the illegal industry.
TII says 1 out of every 4 cigarettes is sold illegally and this tax increase will further encourage it. He said that legal cigarettes account for only 10% of tobacco consumption in India, while tobacco contributes 80% to tax revenue. TII Said that in the countries which have imposed strictness, illegal smuggling has increased and the government should also consider all these things.
Federation of All India Farmers (FAIR) says that India is the fourth largest market for illegal cigarettes. FOUR Says this will cause harm to tobacco farmers and encourage illegal smuggling. FOUR Has demanded the government to withdraw the excise duty.
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