Tobacco Tax India: The Indian government may plan to announce a new National Disaster Contingent Duty (NCCD) or central cess on tobacco and pan masala next year. According to a report published in TV 9 Bharatvarsh, the central government wants to ensure that there is no change in the overall indirect tax on these products.
Which means that from next year, the burden on the pockets of tobacco and pan masala consumers is going to increase. The government is planning to keep this new fee outside the GST structure under the existing cess. Due to which the Central Government will not need the approval of the GST Council for this step. The government is considering passing this new cess directly through the Parliament.
Why is the government taking the decision?
During a conversation with Money Control, a senior official, on condition of anonymity, said that the central government will not reduce the tax burden on sin good products like tobacco and pan masala. In the new GST structure, the maximum tax limit on these will be kept at 40 percent. However, the remaining portion will be retained through a new cess or central levy (like NCCD), so that the total tax burden remains the same. At present, the total indirect tax on tobacco is about 53 percent, while 88 percent tax on Pan Masala is being collected by the government.
But after the implementation of the new GST reform, and completion of the GST loan repayment, this rate is expected to come down to 40 percent. Giving further information, the official said that the government can take new decisions to fulfill this shortfall in the upcoming budget. In the form of new cess, pressure on these sin products may increase. So that there is no change in the tax revenue of the government.
NCCD and new tax plan
NCCD is a central tax imposed under the Finance Act 2001. It is applied by the Central Government on certain products, through which the work of raising money for disaster relief and emergency needs is done. The government can announce new cess to avoid revenue loss.
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