The central government has decided to hike the cess on cigarettes which intends to take away the profits cigarettes firms have made.
“Total revenue gain with higher cess on cigarettes have been seen at Rs 5,000 crore”, said Finance Minister Arun Jaitley.
“28 per cent GST rate on cigarettes remains, 5% ad valorem on cess to stay,” Jaitley said. Only the amount on compensation cess for cigarettes will be raised.
Cess on cigarettes of up to 65 mm will be raised by Rs 485 per thousand sticks and on those exceeding 65 mm by Rs 792 per thousand sticks. Change on GST cess rate for cigarettes will be effective from July 17 midnight.
The GST Council had in May fixed 28 per cent as the top rate for cigarettes.