Tobacco & Tobacco Products are a large contributor to the Government’s Tax Revenue. As per the Rajya Sabha Starred question number 156, dated 3rd August, 2021, the average annual revenue collection (based on last 3 years) including GST, Compensation Cess, Excise Duty and National Calamity Contingent Duty (NCCD) from tobacco products, is about Rs 53,750 crores.
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.
