Run up to the Budget: Cigarettes sector
Inputs
Tobacco and paper
Tax Structure
Customs Duty (%)
Item
|
1999-2000
|
2000-2001
|
Cigarettes
|
45.6*
|
44.04*
|
* Excluding CVD, which varies according
to the size of cigarettes as given below.
Excise Duty (%) (Rs per
thousand sticks)
Item
|
1999-2000
|
2000-2001
|
Non filter Cigarettes
|
|
|
< 60 mm
|
110
|
115
|
60 mm - 70 mm
|
370
|
390
|
Filter Cigarettes
|
|
|
< 70 mm
|
550
|
580
|
70 mm - 75 mm
|
900
|
945
|
75 mm - 85 mm
|
1200
|
1260
|
> 85mm
|
1470
|
1545
|
Background
- Cigarette being a highly taxed industry, its
contribution to the state's exchequer has been continuously increasing. Its
share in the total excise collections has increased from 7% in 1987-88 to
12% in 2000-01.
- Cigarette volumes (based on factory clearances)
have registered a 4.6% y-o-y decline during the period Apr-Jan 01. Total sales
of cigarette sticks in this period stood at 73,434 mn against 76951 mn in
the corresponding period of the previous year. Higher tax incidence in this
fiscal year coupled with competition from smuggled brands has been cited as
main reason for the slowdown.
The Union Cabinet has recently approved the following
- A proposal to ban smoking in public places
- The Tobacco Products Bill 2000 which has prohibited
the advertising of all tobacco products and banned the events sponsored
by tobacco companies across the country.
Previous Budget (FY 2000-01) announcements
- Modvat credit allowed to cigarette manufacturers.
- Excise duty revised upwards by 5 % on all categories
of cigarettes.
Pre-budget industry Wish
List
- The Tobacco Institute of India (TII) has submitted
its following pre-budget recommendations
- Excise duty rates on cigarettes to be pegged
at current levels
- Introduction of single point levy system to
eliminate the cascading impact of tax
- Specific duty structure on cigarettes as recommended
by Tax Reforms Committee (TRC) should continue
Expectations from the budget
Though the players in the cigarette
industry have urged the Government to maintain the current level of duties,
an increase in excise duty is quite likely.
Key Players
ITC, Godfrey Phillips India, VST Industries and GTC Industries.
Rediff-Dun & Bradstreet Budget Impact Analysis
Budget 2001
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