New Delhi, July 17: The government decided to hike the cess on cigarettes which intends to take away the profit the cigarettes firms have made.
"Total revenue gain with higher cess on cigarettes seen at Rs 5,000 crore", said Finance Minister Arun Jaitley.
"In first 15 days of GST implementation, it was noted that the 28 per cent tax rate plus compensation cess on cigarettes when translated, the impact of cascading effect had not adequately factored in, resulting in windfall gain for the cigarette companies, Jaitley said after the council meet.
Now the tax rate on cigarette remains at 28 per cent, the ad valorem at 5 per cent with the numerical amount on each category of filtered and non-filtered cigarettes being raised to Rs 2,076 per 1,000 units, Rs 2,747 per 1,000 and Rs 3,668 per 1,000 of different categories of cigarettes.
For other cigarettes the ad valorem has been increased to 36 per cent plus Rs 4,170 per 1,000 units.
Cess on cigarettes of up to 65 mm raised by Rs 485 per thousand sticks and on those exceeding 65 mm by Rs 792 per thousand sticks. Change on GST cess rate for cigarettes will be effective from July 17 midnight.