Tobacco & Tobacco Products are a large contributor to the Government’s Tax Revenue. As per the Lok Sabha, Unstarred Question No. 1499 dated 28th July 2023, Tobacco and Tobacco products including Pan Masala generated Tax revenues amounting to Rs.72,788 crores in 2022-23.
Despite a small share of tobacco consumption, legal cigarettes contribute a very high proportion of the tobacco tax revenue as cigarettes bear the brunt of taxation in India.
Equitable tobacco taxation would optimize revenue collections from tobacco sector by preventing shift in consumption from revenue-efficient legal cigarettes to cheaper forms of tobacco consumption and to illegal tax-evaded cigarettes.
