New Delhi: PHD Chamber of Commerce and Industry (PHDCCI) has urged the government to consider appropriate budgetary support for restoration of benefits under FTP for tobacco and tobacco products (covered under Chapter 24 of Customs Tariff). . Upcoming Union Budget.
Finance Minister Nirmala Sitharaman is scheduled to present the budget for 2022-23 next month.
In its pre-Budget memorandum, PHDCCI has suggested that it would be appropriate to consider reduction in tax on cigarettes which would help the legal industry to recover volumes from illegal trade and provide higher revenue to the government. Any increase in taxes will further encourage illegal trade and adversely affect revenue collection.
The trade and industry body has sought reform of the disproportionate rate of ad-valorum GST compensation cess of 36% for king-size filter cigarettes (>75 mm length) in line with the levy of 5% ad-valorum. GST Compensation Cess on all other length segments – This measure will help counter the restricted trade in international brands of cigarettes smuggled into the country, most of which belong to the king-size filter segment.
It has also called for introducing a new segment of ‘less than 60 mm length’ filter cigarettes with appropriate tax levies to enable the legal cigarette industry to face a serious challenge to domestic duty-evading cigarettes. Which is offered to the consumers at Rs. Rs 1 and Rs 2 per stick, i.e. prices which are less than applicable taxes. Such a measure would help in reclaiming market share from domestic trafficking, resulting in revenue gain.
The PHDCCI said the government should consider expanding the tax net on non-flu cured Virginia tobaccos, which constitute more than 90% of tobacco consumption in the country. The audit trail resulting from this levy will help in eliminating large-scale downstream tax evasion by manufacturers of value-added products.
The trade body said tobacco and tobacco products are the only goods on which both National Calamity and Contingency Duty (NCCD) and GST are levied. Continuation of NCCD is a regressive step and accordingly, Government is requested to consider doing away with it.
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