Uttarakhand has imposed a one-year ban on gutkha, pan masala and prohibited tobacco- and nicotine-containing food products. The restriction is expected to affect a business estimated at around ₹100 crore annually and GST collections of approximately ₹40 crore a year.
The Uttarakhand government has decided to prohibit gutkha, pan masala and restricted food products containing tobacco or nicotine for one year, citing the objective of protecting public health. The move is expected to affect businesses associated with these products as well as government tax revenue.
According to available figures, these products generate around ₹40 crore in annual GST revenue, with the state and central governments accounting for approximately ₹20 crore each.
The maximum GST rate applicable to these products is 28%. In addition, a cess is levied on certain categories, potentially increasing the overall tax burden.
Based on the available figures, the estimated annual GST revenue of ₹40 crore is divided approximately equally between the state and central governments. The restriction could therefore affect Uttarakhand's revenue by around ₹20 crore and the Centre's share by a similar amount.
These figures are estimates. The actual revenue impact will depend on the extent of the decline in sales, tax collections and compliance with the ban.
The annual business associated with products covered by the restriction is estimated at around ₹100 crore. The ban on sales could pose operational and commercial challenges for manufacturers, wholesalers, distributors and retailers dealing in these products.
Businesses holding existing stocks will also need to take action in accordance with the applicable rules. Directions from the relevant departments will be important in determining how existing inventories are handled and how compliance with the restriction is enforced. Further action will be governed by the applicable legal provisions and administrative guidelines.
The financial impact of the ban will depend on compliance levels and subsequent sales and revenue data.
