{"id":3833,"date":"2019-04-26T06:27:06","date_gmt":"2019-04-26T06:27:06","guid":{"rendered":"https:\/\/www.gsthelplineindia.com\/blog\/?p=3833"},"modified":"2019-07-18T12:59:49","modified_gmt":"2019-07-18T12:59:49","slug":"gst-rate-on-tobacco-products","status":"publish","type":"post","link":"https:\/\/www.gsthelplineindia.com\/blog\/2019\/04\/26\/gst-rate-on-tobacco-products\/","title":{"rendered":"Impact of the GST Rate on Tobacco Products in India"},"content":{"rendered":"<p>The goods and services tax (GST) system was implemented as a one-in-all indirect tax system in India in July 2017 to subsume all the existing indirect taxes and charge a single consumption-based tax on a range of supplies of products\/services. The tax rate under GST is divided in five slabs &#8211; 0%, 5%, 12%, 18%, and 28% &#8211; with a different rate for different product\/service.<\/p>\n<p>Tobacco products are one of the highest taxed commodities in India and also a major source of revenue for the Indian government. Let&#8217;s find out an analysis of GST on tobacco products.<\/p>\n<h2>GST Rate for Tobacco Products<\/h2>\n<p>The supply of tobacco products, including chewing tobacco, khaini, pan masala, jarda, cigarettes, etc, is under the highest GST slab rate of 28%.<\/p>\n<p>GST rate on tobacco products (except for tobacco leaves) is 28%.<\/p>\n<p>GST on tobacco leaves is 5% under reverse charge, which means the recipient of supply pays the tax directly to the government on a reverse charge basis.<\/p>\n<p>In addition to GST, tobacco products are also liable for <a href=\"https:\/\/www.gsthelplineindia.com\/blog\/2017\/08\/31\/gst-compensation-cess\/\">GST cess<\/a> and excise duty.<\/p>\n<p><strong>Excise duty on tobacco<\/strong><\/p>\n<p>Excise duty in the following terms is charged on the manufacturing of tobacco products:<\/p>\n<ul>\n<li>Cigarette \u2013 64%<\/li>\n<li>Bidi \u2013 22%<\/li>\n<li>Chewing products \u2013 81%<\/li>\n<\/ul>\n<p><strong>GST Cess on tobacco items<\/strong><\/p>\n<p>In addition to the standard 28% GST, an additional cess is also charged on tobacco products.<\/p>\n<ul>\n<li>Unmanufactured tobacco (without lime tube) \u2013 bearing a brand name &#8211; 71%<\/li>\n<li>Unmanufactured tobacco bearing a brand name &#8211; 65%<\/li>\n<li>Tobacco refuse, bearing a brand name &#8211; 61%<\/li>\n<li>Chewing tobacco (without lime tube) &#8211; 160%<\/li>\n<li>Chewing tobacco (with lime tube) &#8211; 142%<\/li>\n<li>Filter khaini &#8211; 160%<\/li>\n<li>Jarda scented tobacco &#8211; 160%<\/li>\n<li>Pan masala &#8211; 60%<\/li>\n<li>Pan masala containing tobacco \u2018Gutkha\u2019 &#8211; 204%<\/li>\n<\/ul>\n<p>In its 19th meeting on 17.07.2017, the GST Council had decided to revise Cess rates on cigarettes. The new rates are as follows:<\/p>\n<ul>\n<li>Cigarettes (Tobacco refuse, bearing a brand name) &#8211; 61%<\/li>\n<li>Non- filter cigarette (Not exceeding 65 mm) &#8211; 5% + Rs.2076 per thousand<\/li>\n<li>Non- filter cigarette (Exceeding 65 mm but not 70 mm) &#8211; 5% + Rs.3668 per thousand<\/li>\n<li>Filter cigarette (Not exceeding 65 mm) &#8211; 5% + Rs.2076 per thousand<\/li>\n<li>Filter cigarette (Exceeding 65 mm but not 70 mm) &#8211; 5% + Rs.2747 per thousand<\/li>\n<li>Filter cigarette (Exceeding 70 mm but not 75 mm) &#8211; 5% + Rs.3668 per thousand<\/li>\n<li>Others &#8211; 36% + Rs.4170 per thousand<\/li>\n<\/ul>\n<p><strong>Cess on other tobacco products:<\/strong><\/p>\n<ul>\n<li>Cigar and cheroots &#8211; 21% or Rs. 4170 per thousand, whichever is higher<\/li>\n<li>Cigarillos &#8211; 21% or Rs. 4170 per thousand, whichever is higher<\/li>\n<li>Cigarettes of tobacco substitutes &#8211; Rs.4006 per thousand<\/li>\n<li>Cigarillos of tobacco substitutes &#8211; 12.5% or Rs. 4,006 per thousand whichever is higher<\/li>\n<li>Other &#8211; 12.5% or Rs. 4,006 per thousand whichever is higher<\/li>\n<li>\u2018Hookah\u2019 or \u2018gudaku\u2019 tobacco bearing a brand name &#8211; 72%<\/li>\n<li>Tobacco used for smoking \u2018hookah\u2019or \u2018chilam\u2019 commonly known as \u2018hookah\u2019 tobacco or \u2018gudaku\u2019 &#8211; 17%<\/li>\n<li>Other smoking tobacco not bearing a brand name &#8211; 11%<\/li>\n<li>Smoking mixtures for pipes and cigarettes &#8211; 290%<\/li>\n<li>Other smoking tobacco bearing a brand name &#8211; 49%<\/li>\n<li>\u201cHomogenised\u201d or \u201creconstituted\u201d tobacco, bearing a brand name &#8211; 72%<\/li>\n<li>Preparations containing chewing tobacco &#8211; 72%<\/li>\n<li>Snuff &#8211; 72%<\/li>\n<li>Preparations containing snuff &#8211; 72%<\/li>\n<li>Tobacco extracts and essence bearing a brand name &#8211; 72%<\/li>\n<\/ul>\n<p>The calculation of cess is done on the applicable GST amount. For instance, if the original price of pan masala is rs 5 and GST rate is 28%, the GST amount would be rs 1.40, and the cess at 60% rate would be Rs 0.84.<\/p>\n<h2>Impact of GST on Tobacco Products, Business and Demand<\/h2>\n<p>The high rate of GST &amp; cess on tobacco products was decided with the aim to increase the revenue for the government while keeping a tab on the demand. But the current tax rate on these products is still not in line with the recommendations of the WHO which suggests a 75% tax on all types of tobacco items.<\/p>\n<p><strong>Recommended:<\/strong> <a href=\"https:\/\/www.gsthelplineindia.com\/blog\/2018\/02\/26\/impact-of-gst-on-various-sectors\/\">GST Impact on Various Sectors<\/a><\/p>\n<p>The overall impact of GST on tobacco products, supply and demand has been neutral so far, as the new tax has not majorly affected the industry.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The goods and services tax (GST) system was implemented as a one-in-all indirect tax system in India in July 2017 to subsume all the existing indirect taxes and charge a single consumption-based tax on a range of supplies of products\/services. The tax rate under GST is divided in five slabs &#8211; 0%, 5%, 12%, 18%, &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.gsthelplineindia.com\/blog\/2019\/04\/26\/gst-rate-on-tobacco-products\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Impact of the GST Rate on Tobacco Products in India&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":3836,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[709,706,707,710,708],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Impact of the GST Rate on Tobacco Products in India<\/title>\n<meta name=\"description\" content=\"Is there applicability of GST rate on tobacco products like cigarette, bidi, chewing tobacco, etc in India? What about its impact on the industry? 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