Budget 2017: Arun Jaitley makes smoking, paan masala costlier

Smoking and consuming pan masala is going to pinch the pockets once again this year, with the Budget increasing the taxation for sixth successive year. However, the hike will be one of the softest in recent years.

The tobacco industry is yet to come up with the exact price hike considering it takes into account the hike in value added taxes by the state governments, analysts said the price hike on filter cigarette is expected to be anywhere 4-6% and that for pan masala, chewing tobacco and zarda by 8-10%.

This increase in taxation across the various forms of tobacco would reduce the shift to cheaper forms of tobacco and have a positive effect on the government’s goal to reduce total tobacco consumption.

While the Budget did not change the basic excise duty for cigarettes, it increased the additional excise duty for filter cigarettes which went up by 44% to 49% depending on the cigarette stick length. It also increased the additional duty for pan masala from 6% to 9% and doubled it to 12% for chewing tobacco, jarda scented tobacco and guthka.

The excise duty went up for handmade and machine made paper rolled bidis from Rs 21 per thousand units to Rs 28 per thousand units and Rs 78 per thousand units respectively. However, this is the premium variant selling only in large cities and small number of shops accounting for around 2-3% of industry sales, thereby not tinkering with taxation of the popular tendu leave-rolled bidis.