Cigarette And GST can be increased on all other tobacco products. These major steps can be taken after removing the compensation cess on tobacco products. Currently, cigarettes and other tobacco products in India are charged with compensation cess and other taxes as well as 28 percent GST. With this, the total indirect tax burden on tobacco products becomes 53 percent. The proposal placed under a special discussion states to increase GST to a maximum of 40 percent limit on tobacco products and collect separate excise duty.
All tobacco products come in the category of sin goods
The compensation cess will end on 31 March 2026. In such a situation, it is being considered to recover 40 percent GST to maintain revenue generated from tobacco products. However, the GST Council will take the final decision to impose 40 percent GST on tobacco products. Let us tell you that tobacco products are kept in the category of ‘Sin Goods’. Many types of taxes are collected on the products coming in this category, including excise duty, vapsation cess, NCCD (National Calamity Containnt Duty).
Government generates thick revenue from the sale of tobacco products
The Government of India receives revenue of thousands of crores of rupees every year from tobacco products. In FY 2022-23, the government generated a total revenue of Rs 72,788 crore from the sale of tobacco products. Tobacco products include cigarette besides paan masala etc. Since this news, there is a major decline in shares of tobacco companies on Thursday. Till the news was written, the major tobacco company ITC shares were trading nearly 2 percent and Grodfre Philips’ shares were trading down by more than 5 percent.
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