Budget 2025: India’s goal of becoming a developed nation by 2047 hinges on fostering a healthy working population. However, the country currently loses over 1% of its GDP to cigarette consumption, prompting the government to impose a "sin tax" on products detrimental to public health. Revenue from this tax is often directed toward welfare initiatives and used to discourage consumption by increasing product costs.
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While the GST Council holds the primary authority over taxation of tobacco products, the central government can also adjust the National Calamity Contingent Duty (NCCD) during the Union Budget. In 2023, the NCCD rates on tobacco products increased by 16%, but they remained unchanged in the 2024 Budget. Cigarettes and other tobacco products currently face the highest GST rate of 28%, along with compensation cess.
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India, as a signatory of the WHO Framework Convention on Tobacco Control, is recommended to levy a minimum tax of 75% on the retail price of all tobacco products. However, current rates fall short of this benchmark, with cigarettes taxed at 52.7%, bidis at 22%, and chewing tobacco at 63.8%. Experts have repeatedly called for annual increases in
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