Ahead of the Goods and Services Tax (GST) Council meeting on October 7, an officers panel of the Council has turned down industry proposals to reduce tax on tobacco products.
The industry had sought uniform additional compensation cess on cigarettes, compensation cess on bidis, additional compensation cess on smokeless tobacco products and or lower compensation cess on cigarette sticks up to 70 mm, sources said.
Suggesting the status quo, the Council’s Fitment committee has rejected the proposal.
With respect to tobacco and tobacco products, while deciding the Compensation Cess rates, it was decided that, in line with the weighted average VAT rate of 28.7%, the GST rate on cigarettes be kept at 28%. With respect to bidis, the GST rate is 28%, but no Compensation Cess is levied on it.
In the Union Budget for FY24, the National Calamity Contingent Duty (NCCD) rate on specified cigarettes was raised by around 16% with effect from February 2, 2023.