FM ensures cigarettes burn bigger hole in smokers' pocket

Excise duty on cigarettes was today hiked for the fifth year in a row, as government continued the crack down on consumption of tobacco and allied products.

Consequently, popular cigarettes brands such as Gold Flake Kings and Wills Classic will cost up to Rs 125, dearer by nearly Rs 15 per pack of 10 sticks, while those of premium brands like Marlboro and Benson & Hedges will cost about Rs 250 pack of 20 cigarettes, up by more than Rs 30.

"To discourage consumption of tobacco and tobacco products, I propose to increase the excise duties on various tobacco products other than beedi by about 10 to 15 per cent," said Finance Minister Arun Jaitley while presenting Budget for 2016-17.

The move, however, has been criticised by the lobby group Tobacco Institute of India (TII) stating that the "continuing discriminatory treatment of cigarettes is a matter of deep concern".

"It is extremely disappointing that the Union Budget 2016-17, on the back of 4 successive years of steep duty increases, has once again raised the excise duty rates on cigarettes," TII said in a statement.

Beedis, which are the most popularly consumed smoking tobacco product in India, specially in rural areas, have once again been spared with no increase in tax after 2012-13, it added.

"The increase of 10 per cent in duty rates announced in this year's Union Budget will take up the cumulative duty impact since 2012-13 to 118 per cent," it said.

In his Budget 2016-17 proposals, Jaitley sought to raise additional duty of excise on cigarettes for filter and non- filter not exceeding 65 mm to Rs 215 from Rs 70 per 1,000 sticks.

Additional duty on non-filter exceeding 65 mm but less than 70 mm and filter exceeding 70 mm but less than 75 mm has also been increased by over three times to Rs 370 for per thousand pieces as against the existing Rs 110.

For filter cigarettes exceeding 65 mm but not exceeding 70 mm, it has been increased to Rs 260 for every thousand sticks as against the existing duty of Rs 70.

For other categories, additional duty has been increased over three times to Rs 560 per thousand from the existing Rs 180.

Last year, in the budget of 2015-16, the government had increased excise duty on cigarettes by 25 per cent for cigarettes of length not exceeding 65 mm and by 15 per cent for cigarettes of other lengths, citing need for promotion of public health.  

In this year's Budget, the government has also proposed to increase excise duty on gutkha, chewing tobacco (including filter khaini) and jarda scented tobacco to 81 per cent from the existing 70 per cent.

Similarly, excise duty on unmanufactured tobacco has been proposed to increase 64 per cent from the existing 55 per cent.

"Tariff rate of excise duty on paper rolled biris [whether handmade or machine made] and other biris (other than hand made biris) being increased," the government said.

Lamenting the government's move, TII said: "The combined effect of government's persistently high and discriminatory central and state level taxation on cigarettes has severely impacted the legal cigarette industry, sub-optimised government's revenue collection, encouraged shift to non- cigarette tobacco products and provided a huge fillip to illegal cigarette."