Compensation Cess on tobacco products can generate nearly Rs. 50,000 crores

Chandigarh, August 24, 2020: Public health groups have urged the GST Council to increase Compensation Cess on all tobacco products, which can provide additional tax revenue of Rs. 49,740 crores to the government.
This additional revenue could significantly contribute to the increased need for compensation by different states during the pandemic and to disburse the dues already owed by the Centre.
All the health groups are appealing to the GST Council for applying the Compensation Cess on bidis and also increase the existing Compensation Cess applied on cigarettes and smokeless tobacco products, during the upcoming meeting of the GST council.
The GST revenue receipts of both central and states governments have been severely affected due to the COVID-19 pandemic and, as a result, the central government has not been able to distribute the Compensation Cess dues to different state governments as guaranteed under the GST.
It will also be a win-win for revenue and public health by reducing tobacco use and related diseases, said Surinder Verma, Chairman, Citizens Awareness Group.
“Increasing compensation cess on tobacco products, including bidis, is a winning proposition as it will provide the much needed additional tax revenue for COVID 19 stimulus package for providing relief to the people of the country while motivating millions of tobacco users to quit and stop youngsters from initiating tobacco use,” stated Ashim Sanyal, COO, Consumer VOICE.

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