Tobacco & Tobacco Products are a large contributor to the Government’s Tax Revenue. As per reply in the Parliament in February 2021, the Government collected tax revenue of more than Rs. 55,000 crores in 2019-20 which includes GST, Compensation Cess, Excise Duty and National Calamity Contingent Duty (NCCD)from tobacco products.
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.
