01Tobacco consumption pattern in India is unique
Legal cigarettes account for just 10% of overall tobacco consumed in India. The balance 90% of consumption is represented by traditional products like chewing tobacco, bidis, khaini etc. and illegal cigarettes.
This is unlike the rest of the world where tobacco is synonymous with cigarettes, representing 90% of tobacco consumption.
02Legal Cigarettes are subject to high & discriminatory taxation in India
Cigarette taxes on a per kg basis of tobacco consumption are 55 times higher than the other tobacco products consumed in India.
Incidence of taxes on cigarettes after accounting for the GST Cess increase has trebled in the last 6 years.
03Tobacco is a very important commercial crop in India
India is the world’s 2nd largest producer and a major exporter of tobacco. With an estimated annual production of 800 million kgs., tobacco is an extremely important commercial crop in the country, providing livelihood to 45.7 million people.
Tobacco products generate significant tax revenues amounting to more than Rs.34,000 crores annually.
04The Growth of illegal Cigarette trade poses serious threat in India
Illegal Cigarette trade accounts for as much as 1/4th of the Cigarette Industry in India, causing an annual revenue loss of Rs. 13,000 crores.
Extremely high and constantly increasing tax rates on Cigarettes provide a profitable opportunity for tax evasion thereby encouraging growth in illegal trade.
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