Tobacco makers' shares decline amid reports of GST hike on tobacco products
As per media reports, the government is considering raising GST on cigarettes and other tobacco products once it stops charging the compensation cess. Cigarettes and smokeless tobacco products are classified as sin goods and currently face multiple taxes, including GST, excise duty, and the National Calamity Contingent Duty.
Currently, the government is imposing 28% GST along with additional cess and other levies, on cigarettes and tobacco products, bringing the total tax burden to 53%. However, this tax rate is still below the 75% recommended by World Health Organization (WHO). One of the suggestions being explored is to raise the GST to the highest permissible 40% and top that with an additional excise duty.
As per media reports, the tobacco and tobacco products, including cigarettes and pan masala, are a significant contributor to the governments' tax revenue.
