Indian government may plan to announce a new National Calamity Contingent Duty (NCCD), or central cess, on tobacco and pan masala next year. Find out how this will affect prices.
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Tobacco Tax India: The Indian government may plan to announce a new National Calamity Contingent Duty (NCCD) or central cess on tobacco and pan masala next year. According to a report published in TV9 Bharatvarsh, the central government wants to ensure that there is no change in the overall indirect tax on these products.
This means that, starting next year, the burden on tobacco and pan masala consumers is going to increase. The government is planning to keep this new tax outside the GST structure under the existing cess. This will avoid the need for approval from the GST Council for this move. The government is considering passing this new cess directly through Parliament.
Why is the government taking this decision?
Speaking to Moneycontrol, a senior official, speaking on condition of anonymity, stated that the central government will not reduce the tax burden on sin goods like tobacco and pan masala. The maximum tax limit on these goods will remain at 40 percent under the new GST structure. However, the remaining portion will be maintained through a new cess or central levy (such as NCCD), ensuring the overall tax burden remains the same. Currently, the total indirect tax on tobacco is around 53 percent, while the government levies 88 percent of the tax on pan masala.
However, after the implementation of the new GST reform and the completion of the GST loan repayment, this rate is expected to drop to 40 percent. The official further stated that the government may take new decisions in the upcoming budget to address this shortfall. It may increase the pressure on these sin products through new cesses, ensuring that the government’s tax revenue remains unchanged.
NCCD and the New Tax Plan
NCCD is a central tax levied under the Finance Act 2001. It is imposed by the central government on certain products to raise funds for disaster relief and emergency needs. The government may announce a new cess to address revenue loss.
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