HP increases VAT on tobacco products from 9.75% up to 16%
April, 05th 2011
Himachal Pradesh Friday increased value added tax (VAT) on tobacco products from 9.75 percent up to 16 percent.
To impose the hike, the assembly passed the Himachal Pradesh Value Added Tax (Amendment) Bill, 2011.
After the bill got the governors assent, tobacco and tobacco products, including cigarettes and gutka (chewing tobacco), would be costlier by 16 percent and bidis (leaf rolled cigarettes) by 9.75 percent.
Justifying the hike in the VAT, Chief Minister Prem Kumar Dhumal said the aim is not to increase the revenue but to discourage the people for their consumption.
Quoting a study of the Delhi-based National Institute on Public Finance and Policy on tobacco taxes, Dhumal said the effective way to discourage and reduce consumption of tobacco is to increase their prices through taxes.
The increase in VAT will be a step forward towards making the state smoke free, Dhumal added.