The finance ministry has removed additional excise duty on tobacco, pan masala and cigarettes with effect from July 1, following the GST implementation. The revenue department also "rescind" the central excise notification dated February 27, 2010, which deals with excise duty rate on unmanufactured tobacco and chewing tobacco.
The GST Constitutional (Amendment) Act permits the Centre to levy excise duty on six items including tobacco and tobacco products. The other items are petroleum crude, diesel, petrol, natural gas and ATF. Following the rollout of Goods and Services Tax (GST) from July 1, the central excise notifications for tobacco, pan masala and cigarettes had to be brought in line with the new indirect tax regime.
Under the GST, a cess is levied on demerit and luxury goods over and above the peak GST rate of 28 per cent. The cess on pan masala has been decided at 60 per cent, while in tobacco the levy will vary from 71-204 per cent.
Also scented zarda and filter khaini attracts 160 per cent cess, for pan masala containing gutkha it would be 204 per cent. Filter and non-filter cigarettes not exceeding 65 mm attract a cess of 5 per cent plus Rs. 1,591 per 1,000 sticks.
Non-filter cigarettes exceeding 65 mm but not exceeding 70 mm attract cess of 5 per cent plus Rs. 2,876, while for filter cigarettes the levy is 5 per cent plus Rs. 2,126 per thousand sticks. For cigars, a hefty levy of 21 per cent or Rs. 4,170 per 1,000 sticks, whichever is higher, has been levied.
Branded gutkha has been slapped with a cess of 72 per cent, while smoking mixtures for pipes and cigarettes attract a levy 290 per cent.