Government Revenue Collections Can Increase by Rs 30,000 crore Through Regulation of Non-Virginia Tobacco: National Health Forum

Kolkata, 18 May 2020: National Health Forum (NHF), India’s leading NGO working in the field of
tobacco control and which has been involved in various key effective activities on tobacco
control measures, lauded the efforts being made by the Government of India in fighting the
Covid-19 pandemic.
NHF, through its letter to the Ministry of Finance and Ministry of Health Family Welfare has
appealed to the Government for regulating the sale of non-Virginia tobacco by ensuring that
the sale of non-Virginia tobacco is processed through auction platforms overseen by the
Tobacco Board of India or via APMCs and taxing the non-Virginia tobacco at the same tax as the
Virginia tobacco on per kilogram basis. The initiative will have a double benefit, firstly the
enhancement of revenue and secondly controlling the sale of the so far unregulated tobacco
products in India.
According to Mandakini Sinh, Managing Trustee, NHF, “As per our estimates, a 30% levy as a
reverse charge levied upon and paid by the manufacturers and dealers of non-Virginia tobacco
products will yield a revenue increment of around Rs. 30,000 crores. This will lead to a far wider
net of taxation and all types of tobaccos will be uniformly brought into the tax net. Currently, all
tobacco products manufactured using non-Virginia tobacco (such as Burley tobacco) are in the
unorganized sector and there is large scale evasion of tax by manufacturers and scant respect
for the tobacco control laws.”
Presently, non-Virginia tobacco is freely sold without any intervention by the government and
in the process, the Indian farmer gets a raw deal. The non-Virginia tobacco is used in the
manufacture of chewing varieties of tobacco, hookah, gutkha, kiwam, gudaku , zarda and bidis.
These non-Virginia tobaccos constitute about 85% of tobacco grown in India. And these are
neither appropriately taxed nor it’s growers who are the poorest of poor farmers get stable
prices for their produce. There are private intermediaries and middlemen who take advantage
of the situation and milk the poor Indian farmers.
Virginia Tobacco on the other hand, is properly and strictly controlled and taxed by the
government with checks and balances in place, such that not only proper revenue is generated
but the interest of the farmer is also addressed.
A sizeable quantity of the non-Virginia tobacco goes in the manufacture of chewing tobacco,
gutkha, Pan Masala with tobacco, zarda and snuff which are all products that are extremely

dangerous in the context of the COVID-19 pandemic as they need to be spat out after
There is no doubt in our mind and other like minded NGOs that if the government regulates the
sale and distribution of non-Virginia tobacco as it has done in the case of Virginia tobacco, it will
lead to fair and uniform taxation of all tobacco products and definitely benefit our farmers
(who are currently not paid for almost a year after the sale occurs due to the price setting
power of the powerful middle man).
COVID 19 pandemic has caused widespread destruction of economic activity and there is a
need to channel increased resources in resurrecting economic activity and provide relief to the
jobless. A new source of tax collection to the tune of 30 thousand crore will be a great boost to
support the post COVID rebuilding efforts.
In conclusion, we reiterate and compliment the Government and theMinistry of Finance for
proposing this measure, which is a step in the right direction and seeking to bring a structured
and regulatory layer between the farmer and the manufacturers of tobacco products using non-
Virginia tobacco, which will not only benefit the Indian farmer but also immensely benefit
revenue collection and will curb the consumption of these pernicious products.

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