Expert group under health ministry to review taxation on tobacco products

The Union Ministry for Heath and Family Welfare has set up an expert panel to review the taxation policy for tobacco products.

The panel will develop a proposal for comprehensive tax policy for tobacco products with a public health perspective, the health ministry said.

Members of the expert group include Vikas Sheel, Additional Secretary  Mission Director,  Ministry of Heath and Family Welfare; Pulkesh Sharma, Deputy Secretary, Ministry of Heath and Family Welfare; representatives from the Niti Aayog; GST Council; WHO Country office for India; the National Institute of Public Finance and Policy; the Central Board of Indirect Taxes and Customs; and the Ministry of Finance.

It will analyse the existing tax structure for all forms of tobacco (smoking and smokeless) and then develop a roadmap for tobacco tax policy and recommend immediate steps to be taken for making India MPOWER compliant.

It will also suggest options/models of tax rates/standards for consideration in the Union Budget for 2022-23.

Tobacco companies are likely to report narrower margins for the second quarter. Brokerage house KR Choksey expects ITC to report net profit of Rs 3,290.3 crore - down 2.3 percent over the last year - but up 0.4 percent over the previous quarter.Net sales, however, are expected to increase by 8 percent YoY (down 0.3 percent QoQ) to Rs 14,199.6 crore, according to KR Choksey.

The ITC share was trading at Rs 250.45 at 12.30pm on October 19, down 4.59 percent from Monday's close.

The tax revenue from cigarettes in India in fiscal year 2020 stood at Rs. 356 billion, an increase from the previous fiscal years. In 2011, the tax from cigarettes was Rs. 152.86 billion, which increased to Rs 257.86 billion in fiscal year 2015 and further to Rs. 348 billion in 2019.