Uttar Pradesh pricing itself out of the cigarette revenue market

Uttar Pradesh cigarette vendors and the Uttar Pradesh Cigarette Traders’ Association are urging the state government to cut its 50 per cent rate of VAT on cigarettes to bring it in line with neighboring states.

The traders claim the disparity between the VAT rates imposed in Uttar Pradesh and neighboring states is driving up sales of illicit products and resulting in a huge loss or revenue to the exchequer.

Neighboring states Delhi, Uttarakhand, Haryana and Himachal Pradesh charge VAT in the range of 20-23 per cent.

Uttar Pradesh increased its VAT on cigarettes from 17.5 per cent to 50 per cent in July, ostensibly to deter smoking.