New Delhi, Aug 12 : The states of Punjab, Chhattisgarh and Haryana have moved forward the suggestions to increase cess on tobacco products like cigarettes and smokeless tobacco products.
“In the recent past, representations have been forwarded by States of Punjab, Chhattisgarh and Haryana, wherein it has been proposed to increase the applicable rate of Compensation Cess on tobacco products like cigarettes and smokeless tobacco products,” Finance Ministry said in the just-concluded monsoon session of the Parliament.
Currently, tobacco products such as beedis, cigarettes, chewing tobacco, gutkha, etc. attract GST at the highest rate of 28%.
Compensation cess is leviable on specified tobacco products such as chewing tobacco, gutkha, etc., other than with declared retail sale price, cigarettes, among others, at varying ad valorem rate ranging from 5% to 290% and/or specific rate, on products like cigars, cigarettes, etc. ranging from Rs 2,076 per thousand to Rs 4,170 per thousand.
Further, the Compensation cess rate levied on specified commodities like gutkha, chewing tobacco, smoking mixtures for pipes and cigarettes, etc., with declared retail sale price, has been linked to retail sale price and is leviable at a rate ranging from 8% to 69% of retail sale price.
“Basic excise duty is leviable on specified tobacco products such as beedis, cigarettes, chewing tobacco, gutkha, etc. at varying ad valorem rate ranging from 0.5% to 1% or specific rate ranging from 5 paisa per thousand to Rs 10 per thousand,” Minister of State for Finance Pankaj Chaudhary informed Lok Sabha.
The Centre levies National Calamity Contingent Duty (NCCD) on specified tobacco products such as beedis, cigarettes, chewing tobacco, gutkha, etc. at varying ad valorem rate ranging from 25% to 60% or specific rate ranging from Rs 1 per thousand to Rs 850 per thousand.
NCCD, levied as a duty of excise, was increased by about 16% on specified cigarettes in Budget 2023-24.
There has been growing demand from civil society groups and non-government organisations (NGOs) for increasing the applicable taxes on tobacco products considering that they are considered one of the major causes of cancer.
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