Must – GST Rates
GST Rates on Cigarette, Bidi, Chewing, Impact of GST on Tobacco Sector
India has the second largest number of tobacco users (275 million or 35 percent of all adults in India) in the world. A study estimated that nearly 10 percent of minors use tobacco primarily because tobacco industry targets children as their new consumer base. As per WHO recommendations, existing tax burden on tobacco industry is not at par. Excise duty is charged on the manufacturing of cigarettes, bidi, and other chewing tobacco products at different rates.
Cigarette – 64%Bidi – 22%Chewing products – 81%
Tobacco manufacturers are not allowed to opt for composition scheme under GST, where businesses are usually allowed to pay lower tax rate if turnover does not exceed specified limit. It is anticipated that there might be increase in revenue to the government, but tobacco companies will keep their prices at current level, even if they increase price gradually consumption will not be reduced. Small traders are under threat of getting out of businesses as Centre has imposed 5% GST on tobacco leaves and 28% on unmanufactured tobacco. As per GST product classification, tobacco-based products – cigarettes, gutka, pan masala and khaini have been put under “sinful goods” basket. Also tax imposed on such goods is @28% of the marked price, with 12% additional cess called “Sin Tax”. The GST Council decided to fix the cess rate on tobacco products at Rs 4,170 per 1,000 sticks or 290% ad valorem. It also capped the cess on pan masala at 135% ad valorem. This cess would be levied on above of the GST to be imposed on these products. On Paan Masala, the cess will be levied at 60%, while in tobacco the levy will vary from 71% -204%. Branded Gutkha will be carrying a cess of 72% while smoking mixtures of pipes & cigarettes will attract a levy of 290%. Filter & Non-Filter cigarettes not exceeding 65mm will fetch cess of 5% plus Rs. 1,591/- per 1000 sticks. For Cigars, a hefty levy of 21% or Rs. 4,170/- per 1000 sticks, whichever is higher, would be levied. The cess will be over & above the high GST rates of the 28%.
GST Rate & HSN Code for Tobacco, Stemmed & Stripped
Written By: Amit Khiyani (CA, LCS, IFRS, BCom) Contact: khiyaniamit88@gmail.com Recommended Articles
GST Registration StatusGST Refund StatusGST LoginGST RegistrationGST FormsHSN Code ListITC under GSTGST Due DatesGST RefundPlace of Supply under GST With ExamplesKnow your GST NumberImpact of GST on Education SectorImpact of GST on Transport Sector
