Government Increases Excise Duty on Tobacco Products in Economic Bill 2083/84

Kathmandu. The government has increased the excise duty on tobacco products through the Economic Bill presented for the upcoming fiscal year 2083/84. By increasing the tax rate on cigarettes, bidis, khaini, gutkha, and electronic cigarettes (vape) compared to last year (2082), the government has adopted a policy to discourage tobacco consumption and increase revenue.

According to the new bill, the tax rate has been increased based on the length of cigarettes. For cigarettes up to 70 mm, the tax has been increased from Rs 1792 per thousand sticks to Rs 1845, while a tax of Rs 2490 has been set for cigarettes between 70 and 75 mm. Similarly, for cigarettes longer than 85 mm, the tax has been increased from last year's Rs 4410 to Rs 4578. In the case of cigars and cigarillos, the tax has increased from Rs 31 per stick to Rs 35, which will certainly make cigarettes more expensive in the market.

This time, the government has set the rate for electronic cigarettes, or vapes, at 55 percent. The excise duty, which was 40 percent in the Economic Bill 2082, has been increased by 15 percent to 55 percent in the Economic Bill 2083. Along with vapes, the tax rate on other nicotine-containing products such as oral use and transdermal nicotine patches has also been set at 55 percent.

The tax rate on khaini, gutkha, and jarda has also increased from Rs 880 per kg to Rs 900 per kg. For hookah lovers, the tax on hookah flavor has increased from Rs 1500 per kg to Rs 1600 per kg. The tax on bidis, popular in rural areas, has reached Rs 100 per thousand sticks, which was only Rs 96 last year. However, the government has kept the old rate of Rs 130 per kg unchanged for raw tobacco and tobacco residue.

The tax on prepared bidis has been increased from Rs 96 per thousand sticks to Rs 100. The processed tobacco used for making cigarettes and bidis has been increased by Rs 10 per kg to Rs 360. Although taxes have been increased on all tobacco products, the rate for raw tobacco (unstemmed or tobacco residue) has been kept at last year's rate of Rs 130 per kg.