India is set to introduce a new health and national security tax on machines used to produce a tobacco-related product, and amend the current compensation levy under the goods and services tax regime.
The Finance Minister Nirmala Sitharaman will table the health security to national security cess bill at the country’s parliament, which meets for its winter session from Monday, according to the list of business published on the lower house’s website.
The bill proposes a levy on the machines installed for production of pan masala, Sitharaman said in the bill, a copy of which was reviewed by Bloomberg. The new tax is linked to the production capacity of machines rather than the quantity actually produced of such specified goods, she said.
India’s finance ministry didn’t immediately respond to a Bloomberg request for comment.
The finance minister will also introduce a second bill that will amend the country’s central excise act to tweak the so-called compensation tax charged on tobacco products. The new duties will replace the existing ones that the government charges to compensate the country’s states for any revenue loss from the introduction of GST in 2017.
The move to impose a new levy on the country’s tobacco industry, already one of the highest taxed, comes months after India slashed tax rates on everyday consumption items in a bid to boost domestic demand and mitigate the impact of US President Donald Trump’s tariffs.
The government is proposing to levy 5,200 rupees per thousand sticks for cigarettes with length between 65 millimeters and 70 millimeters. The same on cigarettes of length between 70mm and 75mm will be at 7,000 per thousand sticks.
Reporting by Abhijit Roy Chowdhury with assistance from Anup Roy.
Disclaimer: This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.