FAIFA demands rollback of increased tax on tobacco products

New Delhi (The Uttam Hindu): The Federation of All India Farmer Associations (FAIFA) has urged the government to roll back and revise the steep taxes imposed on tobacco products. FAIFA said the tax structure should be designed in a way that government revenue is protected, illegal trade does not increase, and farmers are not pushed into losses.

In a statement issued on Friday, FAIFA said that a stable and balanced tax policy would help maintain farmers’ incomes, protect employment, and also support long-term public health goals.

The Ministry of Finance has issued a notification imposing a new excise duty on certain tobacco products from February 1. Under the new rates, cigarettes will attract excise duty ranging from ₹2,050 to ₹8,500 per 1,000 sticks, depending on their length.

FAIFA warned that such high taxes would force companies to raise prices, which could reduce sales. This, in turn, would lower tobacco procurement from farmers, leading to oversupply in the market and financial losses for cultivators.

FAIFA President Murali Babu said that at the time of announcing GST 2.0, the government had assured that the overall tax burden on tobacco would remain unchanged and that GST would be capped at 40 percent of the retail price.

He added that farmers had trusted this assurance and welcomed changes in GST rules, as they had led to lower prices for certain products.

Appealing to the government, FAIFA leaders said that legally sold cigarettes in India are already expensive in comparison to income levels, a fact also highlighted in reports by the World Health Organization (WHO).

They cautioned that any further increase in taxes could push consumers towards illegal products. This would result in revenue loss for the government and no benefit for farmers.

FAIFA urged the government to adopt a tax policy that does not penalise law-abiding farmers and industries.