A small pack of cigarettes will soon burn a hole in your pockets, with the government imposing an additional excise duty on several tobacco products effective February 1.
The revised tax structure levies the steepest increase on longer, premium cigarettes. However, most popular cigarette brands do not fall under this slab, news agency PTI reported.
Tax structure for cigarettes
From February 1, tobacco products - including pan masala and cigarettes - will attract 40 percent Goods and Services Tax (GST). The additional duty on cigarettes, reintroduced by the government, will be applied over and above the GST and will depend on the length of the sticks.
Under the new framework, excise duty will be levied per 1,000 sticks. The rates were categorised based on whether a cigarette is filtered or unfiltered. The duty also depends on the length of a cigarette stick in millimetres.
According to the notification, unfiltered cigarettes shorter than 65 mm will attract an excise duty of ₹2,050 per 1,000 sticks, while filtered cigarettes of the same size will be taxed at ₹2100 per per 1,000 sticks
Longer and premium variants will face even higher levies, with duties going up to ₹8,500 per 1,000 sticks.
They have been categorised as follows:
Cost of your favourite cigarette brands
The longer, the costlier - that's how the excise duty on cigarettes will not be decided. Here, we list the long, short and medium cigarettes brand-wise so that one could estimate how much their favourite brand would cost from February 1, when these additional excise duties will come into effect:
Excise on pan masala
The Ministry of Finance also notified the Health and National Security Cess Act, levying cess on the manufacturing capacity of pan masala-related businesses from February 1.
The total tax incidence on pan masala, after taking into account 40 percent GST, will be retained at the current level of 88 per cent.
Chewing and jarda scented tobacco, and gutkha will attract an excise duty of 82 percent, and 91 percent, respectively.
Moreover, tobacco products - including pan masala and cigarettes - will attract 40 per cent GST, while biris (rolled tobacco leaves) will be taxed at 18 per cent.
In India, taxes on cigarettes have remained unchanged in the past seven years since the introduction of GST in July 2017.
This is in contrast to global best practices and public health guidance, which emphasise annual increases in duties to ensure that cigarette prices rise faster than incomes, new agency PTI reported.
According to World Bank estimates, India's total tax incidence on cigarettes is approximately 53 per cent of the retail price, which is substantially lower than the World Health Organization's ecommended benchmark of 75 per cent or more for achieving meaningful reductions in tobacco consumption.
(With inputs from Brandalyzer, Business Today, Economic Times)