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The tobacco industry is booming as evident by the balance sheet of ITC. Many reports have been released by WHO claiming that India is harboring the world’s highest incidence of mouth cancer. We are the second largest consumers of tobacco, having an astonishing 275 million users! But how will GST affect this multi-million dollar industry? Let us see the impact of GST rates on the tobacco industry in India.
In the past decade, excise duty rates have been revised for cigarettes and other tobacco products, but locally manufactured bidi was exempted. GST tax rate on tobacco and tobacco-related products was declared on 18th May by the GST council.
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Answer:
The tobacco industry is booming as evident by the balance sheet of ITC. Many reports have been released by WHO claiming that India is harboring the world’s highest incidence of mouth cancer. We are the second largest consumers of tobacco, having an astonishing 275 million users! But how will GST affect this multi-million dollar industry? Let us see the impact of GST rates on the tobacco industry in India.
In the past decade, excise duty rates have been revised for cigarettes and other tobacco products, but locally manufactured bidi was exempted. GST tax rate on tobacco and tobacco-related products was declared on 18th May by the GST council.
Impact of GST Rate on the Tobacco Industry
Excise duty is charged on the manufacturing of cigarettes, bidi, and other chewing tobacco products at different rates.
Cigarette – 64%
Bidi – 22%
Chewing products – 81%
A lot of revenue is generated from the sale of tobacco for the Indian government. Although the tax burden levied on the Indian tobacco industry is not enough as per the recommendation of the WHO for a tax burden of 75% on all tobacco-related products. There has been an increasing demand for a higher tax burden on the tobacco manufacturers.
Under GST, there will be an additional cess charged on the tobacco-related products, over and above the GST charged at the rate of 28%.
Explanation:
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