Business Daily from THE HINDU group of publications
Friday, Jul 24, 2009
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Business Daily from THE HINDU group of publications Friday, Jul 24, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Corporate
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Performance
Our Bureau Kolkata, July 23 The imposition of pictorial graphic warnings on cigarettes, which comes on the heels of the smoking ban in public places, and the increase of VAT rates by some States, would further impact the cigarette industry and might push people towards cheaper forms of tobacco consumption, according to a press statement issued by ITC Ltd announcing the company’s performance during the first quarter ended June 30, 2009. “The severe taxation and regulatory environment for cigarettes in the country remains a cause of concern,” the release said. Switching to cheaper forms of tobacco consumption might adversely impact the earnings of farmers who gain maximum realisation from cultivating cigarette type tobacco, the company said. The VAT on cigarettes levied by some States such as Maharashtra, Delhi and Rajasthan has gone up to 20 per cent from earlier levels of 12.5 per cent. The current increase in VAT would provide an attractive tax arbitrage opportunity and encourage the inter-State flow of cigarettes. “The smuggled contraband cigarettes, which already enjoy an illegal advantage of tax arbitrage, will have yet another source of clandestine advantage as these packs may not carry the specified graphic warnings,” the release added.
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