India imposes excise duty on cigarettes effective February 1
NEW DELHI -- India has imposed an excise duty on cigarettes in a range of 2,050-8,500 rupees ($22.8-$94.5) per thousand sticks based on the length of the products, effective February 1, the finance ministry said in an order late on Wednesday.
People smoke cigarettes along a road in Mumbai, India, October 26, 2016. Photo: REUTERS/Danish Siddiqui
The move could increase prices of cigarettes for an estimated 100 million smokers in the world's most populous country.
In December, the Indian government approved a new law - the Central Excise (Amendment) Bill 2025 - that replaces a temporary levy on cigarettes and tobacco products.
The excise duty would be imposed on cigarettes in addition to a 40% goods and services tax, the order issued late on Wednesday showed.
Total taxes on cigarettes in India currently make up about 53% of retail prices, well below the World Health Organization benchmark of 75% aimed at discouraging consumption.
This includes a 28% goods and services tax and additional value based levy based on the size of the cigarettes.
The higher levies could impact sales of cigarettes manufacturers like ITC (ITC.NS) and Godfrey Phillips India (GDFR.NS).
Reuters
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