Cigarette cess hiked, won't make any difference to the market price

The first GST Council after the rollout of the goods and services tax (GST) met on Monday, July 18, 2017. And the Finance Minister Arun Jaitley decided to increase the cess on cigarettes.

This move comes after the council decided to prevent manufacturers reaping an annual turnover of Rs 5,000 crore from its sales. The implementation of GST has lowered the prices of cigarettes. 

However, the increase in cess will not increase the prices of cigarettes, reported the New Indian Express.

The meeting of the GST Council was held through video-conferencing.  Jaitley said it had previously fixed a peak GST rate of 28 per cent on cigarettes. On top of it, a cess was levied to create a corpus to compensate states facing losses from implementing the GST.

The cess was made up of 5 per cent to the estimated value of the goods and a fixed per thousand stick rate based on length of cigarettes. The peak GST rate of 28 per cent is also the 5 per cent ad valorem cess will continue, but the fixed cess has been hiked in the range of Rs 485 and Rs 792 per thousand sticks, he said. 
 

• Cigarette
• Cess hike
• Prices same