Cigarette prices will not rise post cess hike: CBEC

The hike in cess will not result in rise in cigarette prices, Central Board of Excise and Customs Chief Vanaja Sarna said on Wednesday after Cigarette industry body, The Tobacco Institute of India (TII) appealed to the GST Council to roll back the cess.

Vanaja said the government has only corrected an anomaly in rates of cigarettes that were making the butts cheaper after GST. Speaking at a GST interactive session here, the CBEC said that many sectors have submitted representations for rate correction and the government was looking into them. However, she said a rate revision under the GST will be done only if there was some inconsistency.

The GST Council had raised the compensation cess on cigarettes on Monday to check the windfall occurring to manufacturers due to the earlier rate fitment by the GST Council.

The TII has argued that the cess hike would not only put pressure on tobaccoindustry, but also impact tobacco farmers. Shares of tobacco companies took a severe hit on Tuesday. However, it was corrected after the government clarified that the rates of cigarettes would not change as a result of the increased cess.