ITC might face challenging fiscal

Home-grown conglomerate ITC Ltd has recently expressed that the current fiscal will be challenging for its flagship cigarette business due to steep increase in taxation, rising illegal trade and increasing regulatory pressures.
ITC might face challenging fiscal
Home-grown conglomerate ITC Ltd has recently expressed that the current fiscal will be challenging for its flagship cigarette business due to steep increase in taxation, rising illegal trade and increasing regulatory pressures.
As per its annual report, India's largest cigarette maker said high incidence of taxation and a discriminatory regulatory regime on cigarettes in India have over the years led to a significant shift in tobacco consumption to lightly taxed or tax-evaded tobacco products like bidi, khaini, chewing tobacco, gutkha and illegal cigarettes, which collectively account for over 88 per cent of total tobacco consumption in the country.
"The share of legal cigarettes in overall tobacco consumption has progressively declined from 21 per cent in 1981-82 to below 12 per cent in 2014-15, even as overall tobacco consumption has increased in India," Kolkata-based ITC said in the report released on Friday.
Last fiscal, there were two rounds of sharp increases in excise duty in cigarettesin July and February. This includes a cumulative tax increase of 115 per cent on filter cigarettes of 'length not exceeding 65 mm', which was launched to counter increasing sales of illegal cigarettes which are sold at Rs 1-2 apiece. States like Kerala, Tamil Nadu and Assam too have increased VAT during the year.
ITC said it is continuing to make representations to policy makers, recommending compulsory licensing of all cigarette manufacturing units irrespective of size, increase in customs duty on imported cigarettes to WTO bound rate, ban on cigarettes from personal baggage allowance, and duty-free trade and exclusion of tobacco products from preferential treatment under free-trade agreements.
The company said it has focused on building flexibility and agility across the supply chain to ensure delivery of volume and variety in a cost-effective manner.
 
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