Published: Tue, July 18, 2017
Markets | By Noel Gibbs

GST Impact: Compensation Cess Increased on Cigarettes, Smoking to Become Costlier

GST Impact: Compensation Cess Increased on Cigarettes, Smoking to Become Costlier

The drop-in share price of cigarette manufacturing companies is on the back of speculations that the government may consider hiking the compensation cess on cigarettes if prices come down post the implementation of the Goods and Services Tax (GST).

Rs 485-792 per thousand sticks.

Last week CLSA, which has maintained buy rating on the stock, said in its report that ITC already announced a price cut of 1-2 percent on its key cigarette brands to pass on excise benefits to consumers. "We noted that cigarette companies were getting windfall profit from reduction in cigarette prices". "This was not the intention of the Council".

"One would hope that a few other issues such as GST rates on existing vehicle leases, ambit of registered trade mark for taxation of packed food products etc, are addressed in the next meeting", said Jain.

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Jaitley had fixed August 5, as the date for the Council's next meeting.

"GST presents a unique opportunity to government to address the growing illegal cigarette trade in the country", said TII Director Syed Mahmood Ahmad.

For other cigarettes the ad valorem has been increased to 36 per cent plus Rs 4,170 per 1,000 units.

Up to 65 mm length: The price will increase by Rs 0.485 per cigarette.

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Up to 65 mm length: Increase of Rs 0.485 per cigarette. The same for 70 mm to 75 mm cigarettes would be 5 per cent plus Rs 3,668 per thousand sticks.

The minister further said that over 70 lakh excise, service tax and VAT assessees have migrated to the GSTN portal and over 5 lakh new registrations have happened. From this it comfortably looks like that the original number of applicants which included duplication... which was 80 lakh, I think we are nearly on the verge of crossing that figure.

"The agenda is some rate issue", she said.

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