Taxes on Tobacco

  • January 9, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Taxes on Tobacco

Subject – Governance

Context – Laws allowing simultaneous levy of GST, excise duty on tobacco products upheld

Concept –

  • In a setback to manufacturers of tobacco and tobacco products, the High Court of Karnataka has upheld that laws that allow simultaneous levy of the Goods and Services Tax (GST), the basic excise duty, and the National Calamity Contingency Duty (NCCD) on these products.
    • National Calamity Contingent Duty (NCCD) is levied as a duty of excise on certain manufactured goods specified under the Seventh Schedule of Finance Act, 2001.
    • The NCCD is tax imposed on pan masala, cigarettes, cellular phones and other tobacco products.
  • The petitioners had questioned the constitutional validity of Section 174 of the GST Act, 2017, which allows the continuation of excise duty on tobacco and tobacco products along with the GST, and Section 136 of Finance Act, 2001, through which the NCCD is levied on these products.
  • The Court said, Parliament, despite the amendment to the Constitution of India by way of Article 254A for making laws to govern goods and services tax, had retained its power under Article 246 for levying excise duties on certain products, which include tobacco and tobacco products post GST regime.

Measures towards tobacco control in India:

  • India adopted the tobacco control provisions under WHO Framework Convention on Tobacco Control (WHO FCTC).
  • Cigarettes and Other Tobacco Products Act (COTPA), 2003:
    • It replaced the Cigarettes Act of 1975 (largely limited to statutory warnings- ‘Cigarette Smoking is Injurious to Health’ to be displayed on cigarette packs and advertisements. It did not include non-cigarettes).
    • The 2003 Act also included cigars, bidis, cheroots, pipe tobacco, hookah, chewing tobacco, pan masala, and gutka.
  • Promulgation of the Prohibition of Electronic Cigarettes Ordinance, 2019: Which prohibits Production, Manufacture, Import, Export, Transport, Sale, Distribution, Storage and Advertisement of e-Cigarettes.
  • National Tobacco Quitline Services (NTQLS): Tobacco Quitline Services have the potential to reach a large number of tobacco users with the sole objective to provide telephone-based information, advice, support, and referrals for tobacco cessation.
  • mCessation Programme: It is an initiative using mobile technology for tobacco cessation.
    • India launched mCessation using text messages in 2016 as part of the government’s Digital India initiative.
  • National Tobacco Control Programme (NTCP) – Government of India launched the National Tobacco Control Programme (NTCP) in the year 2007-08 during the 11th Five-Year-Plan, with the aim to
    • (i) create awareness about the harmful effects of tobacco consumption,
    • (ii) reduce the production and supply of tobacco products,
    • (iii) ensure effective implementation of the provisions under “The Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003” (COTPA)
    • (iv) help the people quit tobacco use, and
    • (v) facilitate implementation of strategies for prevention and control of tobacco advocated by WHO Framework Convention of Tobacco Control.
  • National Health Policy 2017: It has set an ambitious target of reducing tobacco use by 30% by 2025.

WHO Framework Convention on Tobacco Control

  • Governments adopt and implement the tobacco control provisions of the WHO Framework Convention on Tobacco Control (WHO FCTC).
  • It is the first international treaty negotiated under the auspices of the WHO.
  • It was adopted by the World Health Assembly (apex decision making body of WHO) on 21st May 2003 and entered into force on 27th February 2005.
  • It was developed in response to the globalization of the tobacco epidemic and is an evidence-based treaty that reaffirms the right of all people to the highest standard of health.
  • The FCTC’s measures to combat tobacco use include:
    • Price and tax measures.
    • Large, graphic warnings on tobacco packages.
    • 100% smoke-free public spaces.
    • A ban on tobacco marketing.
    • Support for smokers who want to quit.
    • Prevention of tobacco industry interference.
  • World No Tobacco Day is an annual event organised by the World Health Organisation(WHO) on May 31st.

Location of Tobacco Industry

  • Cultivation of tobacco is done all over the country, although the commercial cultivation of tobacco is concentrated in the States of Andhra Pradesh, Telangana, Karnataka, Gujarat, Maharashtra, Bihar, Tamil Nadu and West Bengal.
  • Andhra Pradesh ranks first in terms of Tobacco Production.

Climatic Factors

  • 50-100cm annual rainfall and 15-20oC temperature during growth period is ideal.
  • Tobacco cannot sustain in rainfall more than 100cm.
  • It is grown in warm climates with rich, well-drained soil.
  • Too dry weather is not suitable as leaves break into small pieces.
Governance Taxes on Tobacco