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The GST rate on cigarettes in India is among the highest across all goods and services. This is done to both boost government revenue and discourage the use of tobacco products due to serious health risks. Whether you’re a consumer, retailer, or manufacturer, understanding the GST on cigarettes is crucial for staying compliant and informed.
Under the GST regime, cigarettes attract the highest GST slab of 28%. However, that’s not all. Cigarettes also carry a Compensation Cess, which varies depending on the length and whether the cigarette has a filter.
| HSN Code | Description | GST Rate | Compensation Cess |
|---|---|---|---|
| 2402 2010 | Cigarettes containing tobacco | 28% | Depends on length and filter |
| 2402 9010 | Cigarettes of tobacco substitutes | 28% | Depends on type |
| Type of Cigarette/th> | Compensation Cess |
|---|---|
| Up to 65 mm (without filter) | ₹4.17/unit + 5% of retail sale price |
| Up to 65 mm (with filter) | ₹2.76/unit + 5% of retail sale price |
| More than 65 mm up to 70 mm | ₹4.17/unit + 12% of retail sale price |
| More than 70 mm up to 75 mm | ₹5.74/unit + 12% of retail sale price |
| More than 75 mm | ₹8.72/unit + 36% of retail sale price |
Note: These cess rates are over and above the 28% GST and are revised by the GST Council as needed.
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Cigarettes are taxed heavily under Goods and Services Tax (GST) for the following reasons:
Businesses involved in cigarette manufacturing or retail must:
While the gst on cigarettes provides revenue, it also demands strict compliance from businesses in the sector.
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Companies can claim Input Tax Credit (ITC) on goods and services used in the production or distribution of cigarettes. However, it’s important to note:
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To sum up, the gst rate on cigarettes in India includes both 28% GST and an additional compensation cess that can significantly increase the final price. The aim is to discourage smoking and offset the burden of healthcare costs caused by tobacco-related diseases.
Understanding the gst on cigarettes is key for businesses, retailers, and even consumers who want to stay aware of how tax policies affect pricing. With multiple tax components involved, careful record-keeping and compliance are essential.
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.