The cess varied from Rs 2,126 to Rs 4,170 for cigarettes of different lengths. But this rate was lower than the pre-GST tax incidence.
New Delhi: The GST Council in an emergency meeting on Monday hiked cess on cigarettes to ensure that overall taxes on them does not fall in the GST regime. The move will bring in Rs 5,000 crore of additional tax revenue to the Centre.
The Council had earlier not taken into account the cascading impact of taxes on cigarettes due to which total tax incidence in new GST regime had come down as compared to pre-GST era.
Anti-tobacco groups had also warned government against fall in taxes on cigarettes as it could have adverse impact on health of the people.
GST Council meeting on tax on tobacco was held through video conference showing the pressure on the government to act on the cigarettes issue. Tax on cigarettes was the only agenda for the GST Council meet.
“While any reduction in tax incidence on items of mass consumption would be welcome, the same would be unacceptable in case of demerit goods like cigarettes,” the ministry said.
It has now increased the fixed component of cess on cigarettes category by Rs 485 to Rs 792 per thousand sticks of cigarettes. This is over an above present GST of 28 per cent, 5 per cent ad valorem cess and a fixed cess on cigarettes. The fixed cess varies depending on length and whether cigarettes are filter or non-filter.