GST Rates on Cigarette, Bidi, Chewing, Impact of GST on Tobacco Sector

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GST Rates on Cigarette, Bidi, Chewing, Impact of GST on Tobacco Sector

GST Rates on Cigarette, Bidi, Chewing, Impact of GST on Tobacco Sector: Goods and Services Tax has been rolled out from July 1st, 2017. New tax structure will irrevocably impact the prices of all kinds of products. Being replacement of central and state taxes, its impact can be monitored after some time, post implementation. It is evident from past that excise duties have been kept changing, but locally manufactured bidi was exempted. On 18th May, 2017 GST council has declared GST tax rate on tobacco and tobacco-related products. Tobacco proceeds forms a major contributor of revenue for the Indian Government.

Section 112 of GST 

GST Rates on Cigarette, Bidi, Chewing, Impact of GST on Tobacco Sector

India has the second largest number of tobacco users (275 million or 35 percent of all adults in India) in the world. A study estimated that nearly 10 percent of minors use tobacco primarily because tobacco industry targets children as their new consumer base.

Time of supply of services under GST

As per WHO recommendations, existing tax burden on tobacco industry is not at par. Excise duty is charged on the manufacturing of cigarettes, bidi, and other chewing tobacco products at different rates.

  • Cigarette – 64%
  • Bidi – 22%
  • Chewing products – 81%

Tobacco manufacturers are not allowed to opt for composition scheme under GST, where businesses are usually allowed to pay lower tax rate if turnover does not exceed specified limit.

It is anticipated that there might be increase in revenue to the government, but tobacco companies will keep their prices at current level, even if they increase price gradually consumption will not be reduced. Small traders are under threat of getting out of businesses as Centre has imposed 5% GST on tobacco leaves and 28% on unmanufactured tobacco.

As per GST product classification, tobacco-based products – cigarettes, gutka, pan masala and khaini have been put under “sinful goods” basket. Also tax imposed on such goods is @28% of the marked price, with 12% additional cess called “Sin Tax”. The GST Council decided to fix the cess rate on tobacco products at Rs 4,170 per 1,000 sticks or 290% ad valorem. It also capped the cess on pan masala at 135% ad valorem. This cess would be levied on above of the GST to be imposed on these products. On Paan Masala, the cess will be levied at 60%, while in tobacco the levy will vary from 71% -204%. Branded Gutkha will be carrying a cess of 72% while smoking mixtures of pipes & cigarettes will attract a levy of 290%. Filter & Non-Filter cigarettes not exceeding 65mm will fetch cess of 5% plus Rs. 1,591/- per 1000 sticks. For Cigars, a hefty levy of 21% or Rs. 4,170/- per 1000 sticks, whichever is higher, would be levied. The cess will be over & above the high GST rates of the 28%.

GST Rate & HSN Code for Tobacco, Stemmed & Stripped

HSN Code HSN Name Rate (%)
24011010 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : FLUE CURED VIRGINIA TOBACCO 5
24011020 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : SUN CURED COUNTRY (NATU) TOBACCO 5
24011030 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : SUN CURED VIRGINIA TOBACCO 5
24011040 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : BURLEY TOBACCO 5
24011050 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF BIRIS, NOT STEMMED 5
24011060 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF CHEWING TOBACCO 5
24011070 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF CIGAR AND CHEROOT 5
24011080 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF HOOKAH TOBACCO 5
24011090 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, NOT STEMMED OR STRIPPED : OTHER 5
24012010 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : FLUE CURED VIRGINIA TOBACCO 5
24012020 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : SUN CURED COUNTRY (NATU) TOBACCO 5
24012030 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : SUN CURED VIRGINIA TOBACCO 5
24012040 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : BURLEY TOBACCO 5
24012050 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF BIRIS 5
24012060 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF CHEWING TOBACCO 5
24012070 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF CIGAR AND CHEROOT 5
24012080 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : TOBACCO FOR MANUFACTURE OF HOOKAH TOBACCO 5
24012090 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO, PARTLY OR WHOLLY STEMMED OR STRIPPED : OTHER 5
24013000 UNMANUFACTURED TOBACCO; TOBACCO REFUSE – TOBACCO REFUSE 5
24021010 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARS, CHEROOTS AND CIGARILLOS, CONTAINING TOBACCO : CIGAR AND CHEROOTS 28
24021020 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARS, CHEROOTS AND CIGARILLOS, CONTAINING TOBACCO : CIGARILLOS 28
24022010 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARS, CHEROOTS AND CIGARILLOS, CONTAINING TOBACCO : CIGAR AND CHEROOTS 28
24022020 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARS, CHEROOTS AND CIGARILLOS, CONTAINING TOBACCO : CIGARILLOS 28
24022030 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARETTES, CONTAINING TOBACCO : FILTER CIGARETTES OF LENGTH (INCLUDING THE LENGTH OF THE FILTER, THE LENGTH OF FILTER BEING 11 MILLIMETRES OR ITS ACTUAL LENGTH, WHICHEVER IS MORE) NOT EXCEEDING 60 MILLIMETRES 28
24022040 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARETTES, CONTAINING TOBACCO : FILTER CIGARETTES OF LENGTH (INCLUDING THE LENGTH OF THE FILTER, THE LENGTH OF FILTER BEING 11 MILLIMETRES OR ITS ACTUAL LENGTH, WHICHEVER IS MORE) EXCEEDING 60 MILLIMETRES BUT NOT EXCEEDING 70 MILLIMETRES 28
24022050 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARETTES, CONTAINING TOBACCO : FILTER CIGARETTES OF LENGTH (INCLUDING THE LENGTH OF THE FILTER, THE LENGTH OF FILTER BEING 11 MILLIMETRES OR ITS ACTUAL LENGTH, WHICHEVER IS MORE) EXCEEDING 70 MILLIMETRES BUT NOT EXCEEDING 75 MILLIMETRES 28
24022090 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – CIGARETTES, CONTAINING TOBACCO : OTHER 28
24029010 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – OTHER : CIGARETTES OF TOBACCO SUBSTITUTES 28
24029020 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – OTHER : CIGARILLOS OF TOBACCO SUBSTITUTES 28
24029090 CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES – OTHER : OTHER 28
24031110 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;”HOMOGENISED” OR “RECONSTITUTED” TOBACCO;TOBACCO EXTRACTS AND ESSENCES-SMOKING TOBACCO, WHETHER OR NTO CONTAINING TOBACCO SUBSTITUTES IN ANY PROPORTION–WATER PIPE TOBACCO SPECIFIED IN SUB-HEADING NOTE TO THIS CHAPTER—HUKKAH OR GUDAKU TOBACCO 28
24031190 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;”HOMOGENISED” OR “RECONSTITUTED” TOBACCO;TOBACCO EXTRACTS AND ESSENCES-SMOKING TOBACCO, WHETHER OR NTO CONTAINING TOBACCO SUBSTITUTES IN ANY PROPORTION–WATER PIPE TOBACCO SPECIFIED IN SUB-HEADING NOTE TO THIS CHAPTER—OTHER 28
24031910 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;”HOMOGENISED” OR “RECONSTITUTED” TOBACCO;TOBACCO EXTRACTS AND ESSENCES-SMOKING TOBACCO, WHETHER OR NTO CONTAINING TOBACCO SUBSTITUTES IN ANY PROPORTION–OTHER—SMOKING MIXTURES FOR PIPES AND CIGARETTES 28
24031921 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;”HOMOGENISED” OR “RECONSTITUTED” TOBACCO;TOBACCO EXTRACTS AND ESSENCES-SMOKING TOBACCO, WHETHER OR NTO CONTAINING TOBACCO SUBSTITUTES IN ANY PROPORTION–OTHER—BIRIS—OTHER THAN PAPER ROLLED BIRIS, MANUFACTURED WITHOUT THE AID OF TOBACCO 28
24031929 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;”HOMOGENISED” OR “RECONSTITUTED” TOBACCO;TOBACCO EXTRACTS AND ESSENCES-SMOKING TOBACCO, WHETHER OR NTO CONTAINING TOBACCO SUBSTITUTES IN ANY PROPORTION–OTHER—BIRIS—-OTHER 28
24031990 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;”HOMOGENISED” OR “RECONSTITUTED” TOBACCO;TOBACCO EXTRACTS AND ESSENCES-SMOKING TOBACCO, WHETHER OR NTO CONTAINING TOBACCO SUBSTITUTES IN ANY PROPORTION–OTHER—OTHER 28
24039100 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : HOMOGENISED OR RECONSTITUTED TOBACCO 28
24039910 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : CHEWING TOBACCO 28
24039920 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : PREPARATIONS CONTAINING CHEWING TOBACCO 28
24039930 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : JARDA SCENTED TOBACCO 28
24039940 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : SNUFF 28
24039950 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : PREPARATIONS CONTAINING SNUFF 28
24039960 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : TOBACCO EXTRACTS AND ESSENCE 28
24039970 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : CUT-TOBACCO 28
24039990 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES;HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES – OTHER : OTHER : OTHER

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