Report No. 250
58. Tobacco Cess Act, Act 26 of 1975
Category: Taxes, Tolls and Cess Laws
The Act provided for the levy and collection, by way of a cess, of a duty of excise on Virginia tobacco and a duty of customs on tobacco, for the development of the tobacco industry. The Act imposes a duty of excise at the rate of one paisa per kilogram on Virginia tobacco which is produced in India. However, the objective of revenue generation for the development of the tobacco industry is not met through the proceeds of the cess which are negligible compared to the amount spent in the administration of the cess.
In 2003-04, the cess collected under the Act was only Rs. 13,94,000. Therefore, the Central Government should repeal this Act. This Act has also been recommended for repeal by the PC Jain Commission Report (Appendix A-1).