High and discriminatory taxation on cigarettes has led to unabated growth of illegal cigarettes and cheaper forms of tobacco products, an institute has said.
The Tobacco Institute of India said that as a result of discriminatory taxation, the share of legal cigarette industry in total tobacco consumption in the country has declined to 11 per cent at present, from 21 per cent in 1981-82.
However, overall tobacco consumption in the country has increased by 38 per cent during this period, it said. Over the last three-and-a-half-years, the incidence of Central Excise Duty and State VAT on cigarettes, at a per unit level, has gone up cumulatively by 98 per cent and 124% respectively, the institute said.
The high taxation is exerting severe pressure on the legal cigarette industry even as illegal cigarettes grows unabated and the overall tobacco consumption continues to shift to cheaper non-cigarette tobacco forms, it added. The institute said during the period 2008-09 and 2014-15, whilst inflation (CPI) has increased by 73 per cent but the incidence of tax per 1000 cigarettes has gone up by as much 126 per cent.