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Increase in the tax rate will further increase the unaffordability of cigarettes, particularly at a time when disposable incomes are low and the consumers’ capacity to pay is under stress.If that happens, consumers will opt for smuggled cigarettes which are sold cheaper due to tax evasion.

Excessive taxation on cigarettes over the years has boosted illicit trade at the expense of legal tax paid cigarettes.

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RMESH rightmesh in India ✌️【Job Search】✌️Start small with ₹500 and watch your money grow month by month!This would also lead to loss of potential revenue to the government, besides general public health issues.Estimates from International research agencies such as Euromonitor suggest India is now the 4th largest illicit cigarette market in the world.

Illicit cigarettes according to the research agency now represent 26.1% of Indian cigarette market, as much as 1/3rdof the legal cigarettes – this will go up significantly.To curb illicit trade – an approach, both in terms of tax moderation and strict enforcement is required.

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Revenue growth targets may thus not be met.A focus on encouraging compliance with lower tax rates and improved enforcement would be more effective.

“It will be critical for the government to strike a balance between growth and inflation against the backdrop of geopolitical developments and economic uncertainties.

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