Lok Sabha Question No. 2941 (UNSTARRED), answered on 2023-08-07
Subject: Tax on Tobacco Products
Ministry: FINANCE
Asked by: Janardan Mishra

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

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## LOK SABHA

## UNSTARRED QUESTION NO.2941

## TO BE ANSWERED ON MONDAY, AUGUST 7, 2023/SRAVANA 16, 1945 (SAKA)

## TAX ON TOBACCO PRODUCTS

## †2941.  SHRI JANARDAN MISHRA:

## Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government has taken the cognizance of the fact that the Article 6 of the Framework Convention  on  Tobacco  Central  Calls  for  taxation  as  an  effective  measure  to  reduce  the  demand  for tobacco and recommends a tax on tobacco products at least 75% tax on this retail price;
- (b) whether the Government is aware of the fact that more than 40 countries across the world including Sri Lanka (77 Percent) have imposed more than 75 percent tobacco tax;
- (c)  whether  the  Government  has  noticed  that  average/effective  tax  on  beedi,  cigarette  and  smokeless tobacco  in  the  country  is  22  per  cent,  53  per  cent  and  64  per  cent  respectively  which  is  very  less  in comparison to 75 per cent of uniform tax on all tobacco products recommended by WHO; and
- (d)  the  steps  proposed  to  be  taken  by  the  Government to implement  and  comply  with  Article  6  of the FCTC and increase the tax on tobacco products?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a): Government of India is a Party to the World Health Organization (WHO) Framework Convention on  Tobacco  Control(FCTC)  and  is  implementing  various  demand  and  supply  reduction  measures  for tobacco control. Article 6 of WHO-Framework Convention on Tobacco Control (FCTC) relates to the price and tax measures to reduce the demand for tobacco.
- (b):  As per WHO report on the global tobacco epidemic, 2023, 41 countries were protected by tax rates at 75% or more of the price of the most popular brand of cigarettes. However, Sri Lanka (66.9%) is not one of them.
- (c): Tobacco products such as cigarettes, chewing tobacco, gutkha, etc. attract GST, Compensation Cess,  Basic  Excise  Duty  and  National  Calamity  Contingent  Duty  (NCCD),  while  Beedis  attract  GST, Basic Excise Duty and National Calamity Contingent Duty (NCCD) as per the details in the Table below:

| Tax/Duty/Cess                            | Details                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| GST                                      | Tobacco products such as beedis, cigarettes, chewing tobacco, gutkha, etc. attract GST at the highest rate of 28%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Compensation Cess                        | Compensation Cess is leviable on specified tobacco products such as chewing tobacco, gutkha, etc., other than with declared retail sale price, cigarettes, among others, at varying ad valorem rate ranging from 5% to 290% and/or specific rate, on products like cigars, cigarettes, etc. ranging from Rs. 2076 per thousand to Rs. 4170 per thousand. Further, the Compensation Cess rate levied on specified commodities like gutkha, chewing tobacco, smoking mixtures for pipes and cigarettes, etc., with declared retail sale price, has been linked to retail sale price and is leviable at a rate ranging from 8% to 69% of retail sale price. |
| Basic Excise Duty                        | Basic Excise Duty is leviable on specified tobacco products such as beedis, cigarettes, chewing tobacco, gutkha, etc. at varying ad valorem rate ranging from 0.5% to 1% or specific rate ranging from 5 paisa per thousand to Rs. 10 per thousand.                                                                                                                                                                                                                                                                                                                                                                                                      |
| National Calamity Contingent Duty (NCCD) | National Calamity Contingent Duty (NCCD) is leviable on specified tobacco products such as beedis, cigarettes, chewing tobacco, gutkha, etc. at varying ad valorem rate ranging from 25% to 60% or specific rate ranging from Rs. 1 per thousand to Rs. 850 per thousand                                                                                                                                                                                                                                                                                                                                                                                 |

(d): Government has been reviewing and recalibrating the duty rates on tobacco products from time to time. In Union Budget 2023-24, the rate of National Calamity Contingent Duty (NCCD), levied as a duty of excise, has been increased by about 16% on specified cigarettes.

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