Agri Business

National Health Forum appeals to the Centre to regulate sale of non-Virginia tobacco

Prashasti Awasthi Mumbai | Updated on May 18, 2020

A representative image   -  THE HINDU

National Health Forum (NHF), an NGO based out of India working in the field of tobacco control, has appealed to the Centre to regulate the sale of non-Virginia tobacco.

NHF, through its letter to the Ministry of Finance and Ministry of Health Family Welfare, has asked the Centre to ensure that the sale of non-Virginia tobacco gets processed through auction platforms overseen by the Tobacco Board of India or via APMCs. NHF further suggested taxing the non-Virginia tobacco at the same tax as the Virginia tobacco on per kilogram basis.

The forum noted that the move would help the government reap the double benefit, firstly the enhancement of revenue and secondly controlling the sale of the so-far unregulated tobacco products in India.

According to Mandakini Sinh, Managing Trustee, NHF, As per NHF’s estimates, a 30 per cent levy as a reverse charge levied upon and paid by the manufacturers and dealers of non-Virginia tobacco products will yield a revenue increment of around ₹30,000 crores. This will lead to a far wider net of taxation, and all types of tobaccos will be uniformly brought into the tax net.

“Currently, all tobacco products manufactured using non-Virginia tobacco (such as Burley tobacco) are in the unorganized sector, and there is large scale evasion of tax by manufacturers and scant respect for the tobacco control laws,” she added.

Presently, non-Virginia tobacco is freely sold without any intervention by the government, and in the process, the Indian farmer gets a raw deal. The non-Virginia tobacco is used in the manufacture of chewing varieties of tobacco, hookah, gutkha, kiwam, gudaku , zarda and bidis.

These non-Virginia tobaccos constitute about 85 per cent of tobacco grown in India. And these are neither appropriately taxed nor it’s growers get stable prices for their produce. Some private intermediaries and middlemen take advantage of the situation and milk the poor Indian farmers, NHF claimed.

Virginia Tobacco, however, is controlled and taxed by the government with checks and balances in place, such that not only proper revenue is generated, but the interest of the farmer is also addressed.

A sizeable quantity of the non-Virginia tobacco goes in the manufacture of chewing tobacco, gutkha, Pan Masala with tobacco, zarda, and snuff which are all products that are extremely dangerous in the context of the Covid-19 pandemic as they need to be spat out after consumption.

NHF mentioned that if the government regulates the sale and distribution of non-Virginia tobacco as it has done in the case of Virginia tobacco, it will lead to fair and uniform taxation of all tobacco products and benefit the farmers.

Published on May 18, 2020

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