The government collected central goods and services tax (central tax) worth ₹19,328.81 crore in FY22, up from ₹17,078.72 crore in FY21 and ₹18,175.47 crore from the suppliers of tobacco products, minister of state in the ministry of finance, Pankaj Chaudhary, informed the Rajya Sabha today.
The minister said the excise duty on tobacco products is reviewed in the budget while taking all relevant aspects into account.
On the question of whether the Union government has any plan to increase tax or compensation fees for all tobacco products, including beedis (smoking and chewing tobacco), the minister says the Centre has proposed to increase the rate of National Calamity Contingent Duty (NCCD), a duty of excise, on specified cigarettes by about 16%, but there is “no proposal” for other tobacco products, including beedis.
As regards the GST or compensation cess rate on tobacco products, the minister said it is prescribed only on the recommendation of the GST Council, and that at present, there is no recommendation from the Council.
Finance Minister Nirmala Sithraman, in her Budget 2023 speech, announced a hike in the excise duty on cigarettes and tobacco products. The hike in excise duty on cigarettes was announced for the first time in three years, when the government increased the National Calamity Contingent Duty (NCCD) by 2-4 times across cigarette stick sizes in FY21, resulting in a rise in tax between 9-15%. This time, the NCCD on specified cigarettes is proposed to be revised upwards by about 16%.
The NCCD duty rate on goods other than filter cigarettes of length not exceeding 65 mm has been hiked to ₹230 from ₹200 earlier. On products other than filter cigarettes of length exceeding 65 mm but not exceeding 70 mm, the revised rate of excise duty has reached ₹290 from ₹250 earlier. On filter cigarettes of length not exceeding 65 mm, the revised tax stands at ₹510 from ₹440 earlier. Similarly, for filter cigarettes of length exceeding 70 mm but not exceeding 75 mm, the tax has been revised to ₹630 from ₹545 earlier. On other cigarettes, the tax has been hiked to ₹850 from ₹735 earlier and on the cigarettes of tobacco substitutes, the excise duty has surged to ₹690 from ₹600 earlier.
As per the government, taxes collected from tobacco, similar to taxes collected from other sources, together form part of the overall Gross Tax Revenues (GTR) of the government and are used to fund all its schemes and programmes. In Budget 2022-23, ₹83,000 crore was allocated to fund the requirements of the Department of Health and Family Welfare, says the government.