Indian Raise Import Duty on Cigarettes to 150 Per cent

Ahead of the Budget, industry body PHD chamber has asked the government to hike import duty on cigarettes to 150 per cent to check tax evasion through under invoicing of the consignments.

"This will go a long way in resolving the problem of tax evasion by some unscrupulous importers by under invoicing thevalue of imported cigarettes," the chamber said.

Under-invoicing is normally done to avoid paying tax. Under the practice, companies mention in their records an amount less than what was actually delivered and pocket the difference.

Customs duty on cigarettes import is 30 per cent. PHD also said that cigarettes, which could be currently imported under 'Open General Licence', should be placed under the restricted list. Under the restricted list, prior government permission is required for import. The chamber said that high tax on domestic cigarette manufacturing industry has encouraged smuggling, causing an estimated revenue loss of Rs 2,000 crore to the exchequer. Besides, the industry body has asked the government to ban bringing of cigarettes in personal baggage by visitors. India allows a visitor to carry 200 cigarettes duty free. Finance Minister Pranab Mukherjee will announce the Budget 2012-13 on March 16.

To encourage the domestic industry, it requested the government to allow cigarette manufacturers to sell their items in duty-free shops at the airports.

The chamber also demanded that cigarette manufacturing should not be allowed in the special economic zones and export-oriented units.

The demand comes in backdrop of ban on new licences for cigarette manufacturing.