Tax non-virginia tobacco to earn upto Rs 40,000 cr revenue: SHG to FM

Finance Minister Nirmala Sitharaman during the last tranche of her Covid-19 relief measures | Photo: PIB
Amid the demand for increasing GST cess on sin products and bringing more demerit goods under it, Shram, a self-help group working in collaboration with doctors and professionals working in the field of health and education, has appealed to finance minister Nirmala Sitharaman and health minister Harsh Vardhan to bring smokeless and other non-virginia tobacco under the taxation structure.

According to Shram, smokeless tobacco in India is currently used for unorganised manufacturing of chewing tobacco, gutka, pan masala variants, zarda and others.

These products are widely available and consumed by the poorer section in India due to their affordability and accessibility in the absence of any regulations and taxation, it said.

The group cited a study published in BMC Medicine to say that India accounts for 70 per cent of deaths globally caused due to chewing of smokeless tobacco.

If smokeless tobacco is traded or processed through auction platforms governed by the Tobacco Board of India or via APMCs then it will ensure fair pricing and ample taxation, the SHG said. Regulations will also ensure that manufacturers do not evade taxes in this highly unorganised sector, it added.

Pranasmita Kalita of Shram said suitable taxation on non-virginia tobacco can bring in revenue to the government in the range of Rs 35,000 crore to Rs 40,000 crore approximately.

The GST Council on Thursday will take up the issue of muted collections in the compensation cess, a kitty which goes to meet the revenue shortfall of states due to introduction of the new indirect tax system.


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel