High tax exemptions should not be extended to low turnover industries like bidi manufacturers: Health Ministry

New Delhi, Apr 11 (KNN) Exemptions for tobacco products from the high taxation norms should not be extended to industries with low turnover such as bidi manufacturers as this will allow them to manipulate norms, Health Ministry recently said.

In order to lower consumption of tobacco products, the health ministry has asked to tax all such products, including bidis, at 28 per cent as well as impose higher cess under the new GST regime.

The health ministry also suggested that the cess levied under the GST should be high enough to make such products unaffordable over a period of time.

In an office memorandum issued by the health ministry recently, it suggested that exemptions from the high taxation norms should not be extended to industries with low turnover such as bidi manufacturers as this will allow them to manipulate norms.

"Taking advantage of this exemption, bidi manufacturers closed bigger units and started producing on small scale under different names in a clandestine manner, resulting in huge tax evasions," the memorandum said.

The ministry also highlighted that tiered tax structure for cigarettes needs to be done away with as these slabs are open to manipulation for products substitution and promotion.

As per government estimates, merely the health cost on account of tobacco consumption is pegged at over Rs 10,40,500 crore in 2011 for people aged between 35 to 69 years. Each year, about 10 lakh Indians die from tobacco-related diseases.