GST impact on cigarettes: Weeks after GST was implemented, the prices of cigarettes are set to go up. Union Finance Ministry Arun Jaitley on Monday announced that GST Council has decided to hike cess on cigarettes to take away the windfall manufacturers were making. According to Jaitley, “Change in cess on cigarettes to get Rs 5,000 crore additional revenue.” Also, Union Minister Jaitley confirmed that the new tax rate will be effective from midnight tonight. “GST council in its meet reviewed compensation cess rates on cigarettes and recommended increase in the same,” Jaitley added.
Earlier, Tobacco Institute of India (TII) had said that the GST is an unique opportunity for the government to address the growing illegal cigarettes trade in the country. The institute, a body representing interests of legal cigarette makers such as ITC, Godfrey Philips and VST, also said the government must also consider the plight of distressed tobacco farmers.
“GST presents a unique opportunity to government to address the growing illegal cigarette trade in the country,” said TII Director Syed Mahmood Ahmad. “This would also help distressed tobacco farmers, the legal cigarette industry and also inject buoyancy in revenue collection from this sector,” he added.
TII represents leading cigarette manufacturers accounting for more than 98 per cent of the country’s domestic sales of duty paid cigarettes.