The large disparity in Excise duty rates between ciga-rettes and biris continues to widen. The Union Budget, which was announced on February 28 increased excise duty on cigarettes by 5% (the impact of which, on an average, works out to more than Rs.35 per 1,000). Excise duty on bidis, on the other hand, was increased by only Rs.4 per 1,000. To make matters worse, new legislation has been introduced permitting states to levy VAT on cigarettes at 12.5% with effect from April 1. Bidis have, however, been exempted from this levy.
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