India Strengthens Regulation on Tobacco Product Manufacturers in 2024 Finance Bill
According to a report by the media outlet MENAFN on February 4th, the Indian government has recently made a modification in the "2024 Fiscal Budget" to strengthen regulations on manufacturers of chewing tobacco, pan masala, and similar tobacco products. Under this modification, manufacturers must register their packaging machinery with the Goods and Services Tax (GST) authorities before April 1st, or face fines of up to INR 100,000 (approximately CNY 9,810).
This measure aims to curb the tax revenue loss in the tobacco industry. Simultaneously, any unregistered machines will be subject to a fine of approximately 100,000 rupees and may be seized and confiscated in certain cases.
Sanjay Malhotra, the Finance Minister, has stated that last year the GST committee recommended the registration of production equipment for mouth fresheners, chewing tobacco, and similar products in order to better monitor their production capacity. However, they have not proposed specific punitive measures for non-compliance with registration.
Therefore, the GST committee has decided to impose fines on unregistered devices. Maholotrav told PTI, "This is why penalties for machines that are not registered have been included in the Finance Bill.
Additionally, in February last year, a proposal report aimed at preventing tax evasion in the hand rolling tobacco and chewing tobacco industry was approved by the Goods and Services Tax (GST) Committee, chaired by the Federal Minister of Finance and including state finance ministers. The government also recommended changing the taxation mechanism for compensatory taxes on hand rolling tobacco and chewing tobacco, shifting from an ad valorem tax to a specific rate tax, in order to enhance primary revenue collection. Against this backdrop, the government made corresponding amendments in the 2023 Fiscal Bill to impose GST compensatory taxes on hand rolling tobacco and other forms of tobacco, with the tax rate calculated based on the highest retail price.
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