- By PTI
- Wed, 27 Aug 2025 05:48 PM (IST)
- Source:JND
GST authorities have detected 61 cases of illicit tobacco products, including cigarettes and pan masala, involving tax amounting to Rs 104.38 crore in the first quarter of the current financial year, as per government data.
The Directorate General of Goods and Services Tax Intelligence (DGGI) and other authorities have detected these cases during the April-June period, it said.
Besides, it said, customs field formations and Directorate of Revenue Intelligence (DRI) have seized around 3.93 crore sticks of cigarettes in the current financial year up to June 2025.
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According to the DRI data, seizures of smuggled cigarettes have witnessed a sharp spike between 2019-20 and 2023-24, rising by over 107 per cent in volume and more than 110 per cent in value.
High-margin goods like gold, tobacco, and alcohol are heavily taxed, creating strong incentives for smuggling and tax evasion. Their high value and steady demand make them prime targets for illicit trade, often fuelled by arbitrage and money laundering.
According to available data, seizures of smuggled cigarettes by the DRI, Assam Rifles, CRPF and other enforcement agencies are estimated to have exceeded Rs 600 crore during FY25, former Central Board of Indirect Taxes and Customs (CBIC) chairman and adviser, FICCI CASCADE PC Jha said.
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"Given the high incidence of taxation on cigarettes, the resulting revenue loss is massive. High tax rates create a premium on evasion and place an enormous burden on enforcement agencies to check it. With the government now preparing to simplify GST, this is a golden opportunity to moderate taxes on high-margin products, reduce the incentive for smuggling, and curb the growth of illicit trade," he said.
In a bid to check tax evasion, the government has introduced a special mechanism for manufacturers of tobacco products and related products, which covers certain categories of goods, including pan masala, various forms of tobacco and tobacco preparations, requiring manufacturers to furnish detailed information about manufacturing within specified timelines.
The Central Goods and Services Tax Act has been amended by the Finance Act 2025, which empowers the government to establish a comprehensive track and trace mechanism for specified goods.
Further, to ensure strict compliance with the track and trace provisions, a penalty specifically for violations of the mechanism has been introduced.
According to Think Change Forum Secretary General Ranganath Tannir, a third 40 per cent slab would increase ad valorem rates, distort markets, encourage grey trade in categories like tobacco, which are already witnessing very high illegal trade, and eventually hurt revenue stability.