Increasing tax on cigarette industry is concerning: ITC

ITC Ltd. on Friday said continuous increase in taxation on cigarettes is a concern for the industry.

"Continued increase in taxation is a concern for cigarette industry because in the last six years, the taxes have gone up by 202 per cent," company CEO and Executive Director Sanjiv Puri told shareholders while responding to their queries at 106th Annual General Meeting.

According to media reports, there has been a spurt in availability of illicit cigarettes, he said.

"Cigarettes are taxed much higher than chewing tobacco, so there is shift in consumption. These are concerning trends," Puri said.

According to the company, the combined impact of increase in excise duty announced by the Union Budget 2017 and the recent increase in tax rates effected by the Goods and Services Tax (GST) Council is estimated to result in an incremental tax burden of over 20 per cent on the company.

"The cumulative growth in tax incidence on cigarettes, after cognising for the latest increase in cess rates, stands at a staggering 202 per cent since 2011-12," it said in a statement.

Puri earlier said that there were "some disturbances in the wholesale channel post-demonetisation" and certain restrictions on cash transactions could cause the non-availability FMCG products in stores.

Speaking on the company's hotel business, he said, "We believe this is the sector that is poised for growth as the Indian economic growth improves."