Cigarette Taxation: 20 Billion Extra Revenue in 2020 if Indexation Is Implemented

The Government could raise an extra Rs. 20 Billion from cigarette taxation in 2020 from the proper implementation of the indexation policy articulated in the 2019 Budget and rational calibration of taxes for all cigarette brands.

This Insight sets out the basis of the policy – the income and substitution effects – and its implications.