Experts urge GST Council to increase compensation cess on tobacco products

Hyderabad: Public health groups along with doctors and economists have urged the GST Council to increase compensation cess on all tobacco products to generate additional revenue for the government.

In their appeals to GST council before its meeting on September 17, they urged the council to consider an extra-ordinary measure of levying compensation cess on all tobacco products to get additional revenues. This tax revenue from tobacco could significantly contribute to the increased need for resources during the pandemic including vaccinations and augmenting the health infrastructure to prepare for a possible third wave. According to the group, increasing tobacco taxes in these challenging times, will be win-win policy as it could address the economic shock from Covid-19 pandemic and directly reduce Covid-19 related co-morbidities.

“Unprecedented financial resources would be needed for the country to recover from the economic shock Covid-19 has created. Increasing compensation cess on all tobacco products will be a win-win proposition as it will bring in substantial revenue for the government while motivating millions of tobacco users to quit and preventing youngsters from initiating tobacco use,” said Bhavna Mukhopadhyay, Chief Executive, Voluntary Health Association of India.

India has the second largest number – 268 million- of tobacco users in the world and of these 13 lakhs die every year from tobacco related diseases, the VHAI said in a press release.

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