Decoding tobacco taxes in India: Explore GST rates & hefty cesses for cigarettes, PAN, gutkha & tobacco products. Learn HSN codes & navigate the evolving regulatory landscape.
GST Rates and CESS – Overview
The Indian government walks a tightrope with the tobacco industry. On one hand, it takes in over ₹ 18,000 crores annually through a hefty 28% GST rates and cess 65% on tobacco products, making it a major revenue earner. On the other hand, this revenue comes with a heavy price tag: millions of lives lost each year due to tobacco-related illnesses.
This dual tax structure replaced the pre-GST system of excise duty and VAT, simplifying the regime but sparking debate about the optimal balance between revenue generation and public health. Proponents of higher taxes argue it discourages consumption and funds vital tobacco control measures like awareness campaigns and cessation programs. Opponents raise concerns about job losses and potential economic implications.
The moral dilemma of “sin taxes” adds another layer to the discussion. While the government benefits financially, the associated healthcare costs strain the system considerably. Public health advocates push for stricter control measures, including higher taxes, advertising bans, and even sales restrictions. The future of the tobacco industry and its relationship with the government remains uncertain. Balancing revenue needs with GST rates and cess concerns is a complex challenge, requiring careful consideration of all stakeholders and their perspectives.
| Item Description | GST Rates | GST Cess |
| Unmanufactured tobacco (without lime tube) – bearing a brand name | 28% | 71% |
| Unmanufactured tobacco bearing a brand name | 28% | 65% |
| Tobacco refuse, bearing a brand name | 28% | 61% |
| Chewing tobacco (without lime tube) | 28% | 160% |
| Chewing tobacco (with lime tube) | 28% | 142% |
| Filter khaini | 28% | 160% |
| Jarda scented tobacco | 28% | 160% |
| Pan masala containing tobacco ‘Gutkha’ | 28% | 204% |
GST Rates and CESS for Cigarettes
| Type | GST Rates | GST Cess |
| Non-filter, not exceeding 65 mm | 5% | Rs.1591 per thousand |
| Non-filter, exceeding 65 mm but not exceeding 70 mm | 5% | Rs.2876 per thousand |
| Filter, not exceeding 65 mm | 5% | Rs.1591 per thousand |
| Filter, exceeding 65 mm but not exceeding 70 mm | 5% | Rs.2126 per thousand |
| Filter, exceeding 70 mm but not exceeding 75 mm | 5% | Rs.2876 per thousand |
| Others | 5% | Rs.4170 per thousand |
| HSN Code | HSN Code Description | GST Rates |
| 2401 10 | Tobacco, not stemmed or stripped | 28% |
| 2401 10 10 | Flue cured virginia tobacco | 28% |
| 2401 10 20 | Sun cured country (natu) tobacco | 28% |
| 2401 10 30 | Sun cured Virginia tobacco | 28% |
| 2401 10 40 | Burley tobacco | 28% |
| 2401 10 50 | Tobacco for manufacture of biris, not stemmed | 28% |
| 2401 10 60 | Tobacco for manufacture of chewing tobacco | 28% |
| 2401 10 70 | Tobacco for manufacture of cigar and cheroot | 28% |
| 2401 10 80 | Tobacco for manufacture of hookah tobacco | 28% |
| 2401 10 90 | Other | 28% |
| 2401 20 | Tobacco partly or wholly stemmed or stripped | |
| 2401 20 10 | Flue cured virginia tobacco | 28% |
| 2401 20 20 | Sun cured country (natu) tobacco | 28% |
| 2401 20 30 | Sun cured virginia tobacco | 28% |
| 2401 20 40 | Burley tobacco | 28% |
| 2401 20 50 | Tobacco for manufacture of biris | 28% |
| 2401 20 60 | Tobacco for manufacture of chewing tobacco | 28% |
| 2401 20 70 | Tobacco for manufacture of cigar and cheroot | 28% |
| 2401 20 80 | Tobacco for manufacture of hookah tobacco | 28% |
| 2401 20 90 | Other | 28% |
| 2401 30 00 | Tobacco refuse | 28% |
| HSN Code | HSN Item Description | GST Rates |
| 2402 | CIGARS, CHEROOTS, CIGARILLOS AND CIGARETTES, OF TOBACCO OR OF TOBACCO SUBSTITUTES | |
| 2402 10 | Cigars, cheroots and cigarillos, containing tobacco | 28% |
| 2402 10 10 | Cigar and cheroots | 28% |
| 2402 10 20 | Cigarillos | 28% |
| 2402 20* | Cigarettes, containing tobacco | 28% |
| 2402 20 10 | Other than filter cigarettes, of length not exceeding 65 millimetres | 28% |
| 2402 20 20 | Other than filter cigarettes, of length exceeding 65 millimetres but not exceeding 70 millimetres | 28% |
| 2402 20 30 | Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) not exceeding 65 millimetres | 28% |
| 2402 20 40 | Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 65 millimetres not exceeding 75 millimetres | 28% |
| 2402 20 50 | Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 75 millimetres but not exceeding 85 millimetres | 28% |
| 2402 20 60 | Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 75 millimetres but not exceeding 85 millimetres | 28% |
| 2402 20 90 | Other | 28% |
| 2402 90 | Other | 28% |
| 2402 90 10 | Cigarettes of tobacco substitutes | 28% |
| 2402 90 20 | Cigarillos of tobacco substitutes | 28% |
| 2402 90 90 | Other | 28% |
| HSN Code | HSN Item Description | GST Rates |
| 2403 | OTHER MANUFACTURE TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES; HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES | |
| 2403 11 | Smoking tobacco, whether or not containing tobacco substitutes in any proportion | |
| 2403 11 10 | Hookah or gudaku tobacco | 28% |
| 2403 11 90 | Other | 28% |
| 2403 19 | Other | |
| 2403 19 10 | Smoking mixtures for pipes and cigarettes other than paper rolled biris, manufactured | 28% |
| 2403 19 21 | Smoking mixtures for pipes and cigarettes other than a paper rolled biris, manufactured without the aid of machine | 28% |
| 2403 19 29 | Other | 28% |
| 2403 19 90 | Other | 28% |
| 2403 91 00 | “Homogenised” or “reconstituted” tobacco | 28% |
| 2403 99 | Other | |
| 2403 99 10 | Chewing tobacco | 28% |
| 2403 99 20 | Preparations containing chewing tobacco | 28% |
| 2403 99 30 | Jarda scented tobacco | 28% |
| 2403 99 40 | Snuff | 28% |
| 2403 99 50 | Preparations containing snuff | 28% |
| 2403 99 60 | Tobacco extracts and essence | 28% |
| 2403 99 70 | Cut-tobacco | 28% |
| 2403 99 90 | Other | 28% |
Conclusion
The relationship between the tobacco industry and government revenue in India is a complex tapestry woven with threads of public health concerns, economic considerations, and ethical dilemmas. Here’s a succinct conclusion that captures the essence of this intricate dynamic:
- High taxes on tobacco generate substantial revenue for the government but come at a steep cost – millions of lives lost to tobacco-related diseases.
- Balancing revenue generation with public health protection remains a continuous challenge, sparking debates about optimal tax rates, cess utilization, and broader tobacco control measures.
- While the immediate financial benefit of the tobacco industry is undeniable, the long-term economic and social costs associated with its products demand careful evaluation and proactive policy interventions.
This conclusion of GST rates and CESS highlights the multifaceted nature of the issue and avoids a definitive, single-sided perspective. It encourages further exploration and critical thinking about the potential solutions for navigating this intricate terrain.
