ITC Shares Drop After India Increases Cigarette Tax

NEW DELHI: When it comes to smoke, Finance Minister P Chidambaram does not want to differentiate between filter and plain cigarettes, on which he has proposed to levy an excise duty of up to Rs 1.32 per stick.

The new duty structure brings non-filter cigarettes on par with filtered ones.

"Non-filter cigarettes are more toxic than filter cigarettes, yet they enjoy a favourable tax regime, which is iniquitous. I propose to tax both filter and non-filter cigarettes on par by applying higher rates," Chidambaram said in his Budget speech.

For the smaller non-filter cigarettes not exceeding 60 mm length, the excise duty has been increased nearly five times to Rs 819 per 1,000 cigarettes from prevailing Rs 168.

But for the longer cigarettes, the excise duty has been increased by over two and half times to Rs 1,323 from Rs 546 for every 1,000 sticks.

He, however, kept the excise on filtered cigarettes unchanged.

At present, cigarettes attract duty at varying rates depending upon whether they are filter or non-filter and their length. Excise duty rates on non-filter cigarettes have been enhanced to bring them at par with filter cigarettes of corresponding length.