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Have a tax rate that disincentivises cigarette smuggling: FAIFA

FAIFA said a steep increase in excise duty has led to growth of smuggling of cigarettes in India

Press Trust of India  |  New Delhi 

Have a tax rate that disincentivises cigarette smuggling: FAIFA

Farmers' body Federation of All India Farmer Associations (FAIFA) on Monday asked the government to have a taxation policy that disincentivises smuggling in India, ahead of a crucial meeting of the Council later this week.

The FAIFA, a non-profit organisation representing farmers across states such as Andhra Pradesh, Telangana, Karnataka and Gujarat, said smuggling has hit tobacco farmers supplying to legitimate manufacturers in India.

It urged Finance Minister "to protect the interests of Indian FCV tobacco farmers through balanced and uniform taxation under GST".

"We appeal to the government to have a taxation policy that disincentivises smuggling in India," General Secretary Murali Babu said in a statement.

He further said is an opportunity for the government to ensure illicit trade is eradicated from the country by removing distortions and address tobacco taxation in India.

It will bring back lost livelihood opportunities of the tobacco farmers, he added.

said a steep increase in in the recent past has led to growth of smuggling of cigarettes in India due to the high tax arbitrage.

Illegal trade is more than 20 per cent of the industry in India, making the country the 4th largest and fastest growing illicit market in the world, it claimed.

It has resulted in revenue losses of approximately Rs 9,200 crore and is growing annually, it added.

A shift in consumption to smuggled cigarettes has affected Indian tobacco farmers adversely as the illegal cigarettes do not use Indian tobacco, said.

The demand of the farmers' body comes ahead of the meeting of the all-powerful Council to be held in Srinagar on May 18-19, where it is expected to give final nod to four rules and also fix rates for major commodities and services.

The four rules pertain to how input tax credit is to be calculated and claimed, valuation of supply of goods and services, method for intimation for opting for composition levy and transitional rules.

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