Smoking Cigarettes will burn hole in the pocket

In the Union Budget for the year 2010-11 presented by the Finance Minister in the Parliament today the rates of  basic excise duty have been raised on all forms of tobacco and tobacco products (e.g. branded unmanufactured tobacco and tobacco refuse, branded hookah or gudaku tobacco, chewing tobacco, preparations containing chewing tobacco, jarda scented tobacco, snuff and its preparations, tobacco extracts and essences etc ; smoking tobacco, cut tobacco, smoking mixtures etc.),  On some of these item notified under section 4A which are assessed to duty on Retail Sales Price (RSP) the rates of abatement are also revised.  The rates of duty on bidis  has not been touched.

The existing slab of filter cigarettes of length not exceeding 70 mm has been broken up into two slabs, filter cigarettes of length not exceeding 60 mm  and filter cigarettes of length exceeding 60 mm but not exceeding 70 mm and the basic excise duty (BED) on all cigarettes, other than cigarettes of length not exceeding 60 mm (both filter and non-filter), has been increased. In respect of cigars, cheroots and cigarillos of tobacco, the revised rates of Basic Excise duty basis is 10% of the value or Rs.1227 per thousand, whichever is higher Additional Excise duty 1s 1.6% of the value or Rs.246 per thousand, whichever is higher. Similarly cigars, cheroots and cigarillos manufactured from tobacco substitutes will  attract Basic Excise Duty of  10% of value or Rs.1473 per 1000, whichever is higher.

Another important change proposed in the budget in respect of tobacco is the shift to compounded levy under section 3A of the Central Excise Act on chewing tobacco and branded unmanufactured tobacco packed in pouches with the aid of packing machines. The scheme is similar to the one already in operation for Guthka and pan masala with the difference that the facility of input credit of the duty paid on bulk packs of chewing tobacco shall be available to the manufacturer of packaged products subject to the levy. This scheme will come into effect on 08.03.2010.

Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Rules, 2008 have also been amended to effect certain technical changes. A manufacturer is now allowed to remove goods, other than notified goods, from his factory during the period of abatement specified in rule 10 and the notified goods already produced before the commencement of said period can also be removed within the first two days of the abatement period.

The above amendments proposed in the Budget clearly brings out the intention of the Government  to deter the common public from their continued association with tobacco and tobacco products which has been one of the major cause of health problems in India. The message is very clear that if you want to enjoy the tobacco products you will have to pay more or otherwise quit on them. In other words since the common man is hell bent upon spoiling his health let the Government at least make a killing out of it.

The proposal to levy Central Excise Duty on chewing tobacco and branded unmanufactured tobacco packed in pouches with the aid of packing machines to compounded levy scheme under section 3A of the Central Excise Act as in existence for Guthka and pan masala is with an idea to plug the huge evasion of Central Excise duty on these products.

The bottom line of the above changes are that common people who are addicted to tobacco and tobacco products will have to shell out more money for fulfilling their crave for their addictions.