The Tobacco Institute of India has appealed to the Goods and Services Tax Council to roll back the increase in cess on cigarettes, The Economic Times reported on Wednesday. TII is the representative body for manufacturers of cigarettes and other tobacco products.
The institute has said that the steep revision in cess would adversely impact Indian tobacco farmers, as well as increase smuggling and illicit cigarette trade in the country. In a press release on Tuesday, TII indicated that the impact of the increase in compensation cess on cigarettes was significantly higher than the reduction in cigarette prices because of the new GST regime, which came into effect on July 1.
The GST Council on Monday had increased the cess on cigarettes costing between Rs 485 and Rs 792 per thousand sticks. The peak GST rate of 28% and an ad valorem cess, which is levied in proportion to the estimated value of the goods, of 5% will remain, Finance Minister Arun Jaitley had said after an emergency meeting with the council.
Stocks of ITC, India’s leading cigarette manufacturer, had plunged more than 12% on both the Sensex and Nifty on Tuesday following the increase in cess on cigarettes. The decline had wiped out Rs 50,000 crore from the company’s market capitalisation, reported The Times of India.