New Delhi: Like every year, the taxman has given special attention to tobacco products in this year’s Budget proposals.
In his budget speech, finance minister Arun Jaitley on Wednesday proposed to hike excise duty on all tobacco products, excluding bidi.
While excise on various lengths of cigarettes has been increased by 2.5% to 6%, for paan masala, it has been increased from 6% to 9% and unmanufactured tobacco from 4.2% to 8.3%. For other tobacco products like chewing tobacco, jarda-scented tobacco and gutkha, Jaitley proposed to double the excise from 6% to 12%.
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Shares of ITC Ltd, the country’s largest cigarette maker, were up 3.47% at Rs267 at 2.40pm after the announcement.
The proposed excise duty hike is below the estimates of equity analysts. Analysts had expected the duty increase to be around 10%.
Since July 2014, when Jaitley presented the National Democratic Alliance government’s first budget, taxes on cigarettes have increased substantially.
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In the 2015 budget, Jaitley hiked excise duty by 25% on cigarettes of length not exceeding 65mm, and by 15% on cigarettes of other lengths. In last year’s Budget, Jaitley increased excise on cigarettes by around 10%.
Companies will decide on the actual price increase on cigarettes and other tobacco products after calculating the effect of the tax increase.