- Consideration of GST Increase: India is exploring the option to raise the Goods and Services Tax (GST) on cigarettes and tobacco products to 40% after the compensation cess ends on March 31, 2026, to maintain tax revenue levels.
- Current Tax Structure: Tobacco products currently face a combined indirect tax rate of 53%, including a 28% GST, compensation cess, excise duty, and other levies, though this remains below the 75% rate recommended by the World Health Organization.
- Government Discussions: A ministerial panel is reviewing the future of the compensation cess and considering various options, including replacing it with a health cess, while also evaluating how taxation should be structured to optimize revenue from tobacco products.
Source A2ztaxcorp
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