Cigarette traders in Uttar Pradesh have decried the value added tax (VAT) hike on cigarettes from 17.5 per cent to 50 per cent in the state from July.
They claim the ‘unprecedented hike’ would not only imperil the livelihood of over 6 lakh cigarette traders/venders in UP, but, would also promote smuggling from neighbouring states, where the rates are much lower.
Besides, the illegal cigarettes trade comprising cheap products of unbranded and duplicate brands would also expand, UP Cigarette Traders’ Union president Shyam Mohan Agarwal said at a press conference called here.
“We urge the state government to review its decision, which apparently has been taken in haste without giving much thought to its implications,” he added.
To a Business Standard query, he said the monthly cigarette trade in UP was estimated at Rs 200-250 crore. “The illegal cigarettes trade in UP is almost 25 per cent of the legal trade and UP has the largest number of such illicit manufacturers.” He informed that the body had sought time from the chief minister’s office for a meeting to handover a memorandum in this regard.
The VAT rates on cigarette in neighbouring states like Delhi, Uttarakhand, Haryana, Himachal Pradesh, Madhya Pradesh, Bihar, Jharkhand and Chhattisgarh ranges between 20 to 23 per cent.
“According to a tobacco survey report, cigarette consumption in UP among adults was only 2.3 per cent vis-à-vis over 39 per cent of other tobacco products. Therefore, increasing VAT only on cigarette is rather unfair,” he fumed.
The traders’ body maintained the tax differential in cigarettes would attract anti-social elements and smugglers to the state, while the state would witness its tax revenue fall with no reduction in cigarette consumption.
