Budget 2023: Cigarettes to cost more as FM proposes 16% hike in duty; details of NCCD duty rates here

Finance Minister Nirmala Sitharaman on Wednesday announced a 16% increase in NCCD on certain cigarettes.

Budget 2023 LIVE Cigarettes to cost more as FM Sitharaman proposes 16% hike in duty snt

First Published Feb 1, 2023, 12:35 PM IST | Last Updated Feb 1, 2023, 1:12 PM IST

While presenting the Union Budget 2023, Finance Minister Nirmala Sitharaman announced the hike in the National Calamity Contingent Duty (NCCD) on cigarettes sharply by 16%.

The government left this duty untouched for two years. In the Budget for FY21, the NCCD was raised by 2-4 times across cigarette stick sizes, resulting in tax hikes of 9-15%. NCCD accounts for about 10% of overall taxes on cigarettes.

Analysts predict that volumes for cigarette manufacturers would be severely harmed by an increase of more than 12%.

Also read: Budget 2023: Mobiles, TVs to get cheaper; Gold, silver, cigarettes to get costlier; See full list here

According to analysts, a significant increase in tobacco taxes and stricter rules will not only ensure that citizens have better health, bringing out the finest in human capital but will also contribute to the realisation of Prime Minister Narendra Modi's goal of a $5 trillion economy by 2025.

India is one of the 182 nations that have ratified the WHO Framework Convention on Tobacco Control, which calls for a minimum 75% tax on the retail cost of all tobacco products. But in India, taxes on cigarettes are 52.7%, "bidis" are 22%, and chewing tobacco is 63.8%.

Almost 27 crore persons aged 15 and over used tobacco in some way, according to the Global Adult Tobacco Survey-India (GATS-2016-17). India ranks third in terms of tobacco production and consumption worldwide.

NCCD Duty rate on cigarettes

Description of Goods	Rate of excise duty From (per 1000 sticks)	To (per 1000 sticks)
Other than filter cigarettes, of length not exceeding 65 mm	200	230
Other than filter cigarettes, of length exceeding 65 mm but not exceeding 70 mm	250	290
Filter cigarettes of length not exceeding 65 mm	440	510
Filter cigarettes of length exceeding 65 mm but not exceeding 70 mm	440	510
Filter cigarettes of length exceeding 70 mm but not exceeding 75 mm	545	630
Other cigarettes	735	850
Cigarettes of tobacco substitutes	600	690