Impact on Cigarettes – Council decides to surge cess on Cigarettes

The council of GST decided to raise the cess on cigarettes in order to address the anomaly under new government. This decision will give a raise to the prices of cigarettes under the Goods and Service Tax council as rolled out on July1. Post this decision, ITC (Indian Tobacco Company) was the major winner as this resulted into an increase of 10% in its stocks over the June end calculations at broader market. For other cigarettes the price rise is around 31%. The new price change took effect this midnight.
Honorable, Finance Minister Arun Jaitley said, the cost to bear for the anomaly is Rs 5,000 in tax and the companies benefitted.
After the detection of an anomaly in the cess on cigarettes, a GST council meeting was called. As the impact of cascading GST was not factored in numbers, it resulted to unexpected gains in the cigarette industries, however this was not the intention of the counsil. The GST counsil met via a videoconference call to review the cess on cigarettes and decided increase it.

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