Introduction: The Government of India, under the Ministry of Finance, has been under scrutiny regarding the implementation of a health tax on tobacco products. This move was suggested by the Parliamentary Committee on Health & Family Welfare, raising questions and concerns. In response to Unstarred Question No-1823 posed in the Rajya Sabha, the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, provided insights into the current taxation system for tobacco and addressed the proposal for a health tax.
Detailed Analysis: (a) Taxation Structure for Tobacco Products: Currently, tobacco products fall under the highest GST rate of 28%. Additionally, specified tobacco products attract Basic Excise duty, National Contingent Calamity duty (NCCD), and GST Compensation Cess. In the Union Budget 2023-24, the rate of NCCD levied as a duty of excise was increased on specified cigarettes by about 16%. This reflects the government’s effort to regulate and discourage the consumption of tobacco through a robust taxation framework.
(b) Health Tax Proposal and Government’s Response: Contrary to the recommendation of the Parliamentary Committee on Health & Family Welfare, the Minister of State clarified that there is no proposal under consideration for a health tax on tobacco products. The response emphasizes that the taxes collected from tobacco products, including GST and other duties, contribute to the overall Gross Tax Revenues (GTR) of the Government of India. These revenues are utilized to fund various schemes and programs, including those administered by the Department of Health and Family.
Conclusion: In conclusion, the article sheds light on the current taxation structure for tobacco products in India and the absence of a health tax proposal. Despite the government’s efforts to deter tobacco consumption through increased levies, the specific allocation of taxes to NCD/Cancer Care Fund is not on the immediate agenda. The response underscores the broader contribution of tobacco-related taxes to the government’s overall revenue, emphasizing its role in funding diverse governmental initiatives. As the debate on tobacco taxation continues, stakeholders await further developments and potential policy shifts.
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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
RAJYA SABHA
UNSTARRED QUESTION NO-1823
ANSWERED ON – 19.12.2023
HEALTH TAX ON TOBACCO PRODUCTS
1823. SHRI BHUBANESWAR KALITA:
Will the Minister of Finance be pleased to state:
(a) whether Government has introduced a Health tax on tobacco products as recommended by the Parliamentary Committee on Health & Family Welfare; and 433
(b) if so, by when Government will start the Health tax collection for allocation to NCD/Cancer Care Fund, the details thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) : Currently, tobacco products attract GST at the highest GST rate of 28%. In addition, specified tobacco products also attract Basic Excise duty, National Contingent Calamity duty (NCCD) and GST Compensation Cess. In Union Budget 2023-24, the rate of National Calamity Contingent Duty (NCCD) levied as a duty of excise was increased on specified cigarettes by about 16%.
(b) : No such proposal is under consideration. The taxes collected from tobacco products, as for most other taxes, form part of the overall Gross Tax Revenues (GTR) of the Government of India and are used to fund all schemes and programmes of the Government including those administered by Department of Health and Family
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