Cigarette, Gutkha Prices to Increase from February 1
A new tax structure will come into effect from February 1 for cigarettes, tobacco, and pan masala products. The central government will levy an additional excise duty and a health cess over and above the existing GST, while the compensation cess currently imposed on so-called “sin goods” will be withdrawn.
Under the new framework, additional excise duty will be levied on tobacco and related products. At the same time, health and national security cess will be imposed on pan masala. These new taxes will be different from the existing GST.
In December last year, the central government approved a new law. Under this, a new tax framework will be implemented on cigarettes and other tobacco products. Under this, GST will now be levied at 40 percent instead of 28 percent on these products.
According to the government notification, 40 percent GST will be applicable on pan masala, cigarettes, tobacco and other similar products from February 1. 18 percent GST on beedis will be levied as before. That is, there has been no change in its GST rates.
However, new taxes will now be levied separately on top of these GST rates. Health and National Security Cess will be levied on Pan Masala. At the same time, additional excise duty will be applicable on tobacco and related products.
Currently, the total tax on cigarettes in India is around 53 percent. This includes 28 percent GST, while the remaining tax is levied based on value. This tax rate is considered much lower than the recommendation of the World Health Organization. The WHO says that taxes on cigarettes should be at least 75 percent to discourage smoking.
