Nirmala Sitharaman Proposes Nearly 10% Hike in Cigarette Prices

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Indian Finance Minister Nirmala Sitharaman presented the country’s General Budget 2020-21 on Saturday, February 1. Above all, people going through economic crises had high expectations from this budget. There is unfortunate news for people who love to smoke. The finance minister in the budget has proposed a roughly 10 percent rise in excise duty on cigarettes.

In this budget, the government has announced a new tax slab rates giving considerable relief to the taxpayer. Like every time, in this budget too, the government has increased tax on many items, including cigarettes, tobacco products. In India, even though smokeless nicotine has the steepest rate of consumption, more income is made from legal cigarettes. Moreover, at the same time, some essential commodities are made cheaper so that the common man can get relief.

Notwithstanding concerns put by the cigarette and tobacco industry, health organizations consider costs on such harmful commodities in India are still cheaper than the World Health Organisation (WHO) limit of 75 percent on the direct price.

Excise duty on cigarettes across various lengths also increased –

The prices of cigarettes are usually based on the length of cigarettes. The government has also proposed high excise duty taxes on cigarettes. Here are the new applicable excise duty taxes –

  • 65 mm: From Rs 5 per 1000 sticks to Rs 440 per 1000 sticks
  • B/w 65-70 mm: From Rs 5 per 1000 sticks to `Rs 440 per 1000 sticks
  • B/w 70-75 mm: From Rs 5 per 1000 sticks to Rs545 per 1000 sticks
  • 75 mm: From Rs 5 per 1000 sticks to Rs735 per 1000 sticks
Why the prices of cigarettes and tobacco products get hiked every year?

The excise duty on the entire value chain of tobacco products like cigars, cigarettes, hand-made ‘bidis’ and ‘pan masala’ has witnessed a massive hike in prices in the past few years. This price hike is a part of the government’s strategy to curb the application of such harmful products. Moreover, cigarettes and tobacco products witness massive hikes for the benefit of public healthcare.