New Delhi: GST authorities have uncovered 61 cases of illicit tobacco products, including cigarettes and pan masala, involving unpaid taxes worth Rs 104.38 crore in the first quarter of the current financial year (Q1 FY26), government data showed.
The cases were detected during April-June 2025 by the Directorate General of Goods and Services Tax Intelligence (DGGI) and other authorities. In addition, customs and the Directorate of Revenue Intelligence (DRI) have seized nearly 3.93 crore sticks of cigarettes so far this financial year.
Data from the DRI shows that cigarette smuggling has sharply increased between 2019-20 and 2023-24, rising by over 107 per cent in volume and more than 110 per cent in value. Experts say that heavily taxed high-margin goods like tobacco, alcohol, and gold are prime targets for smuggling and tax evasion because of their high value and steady demand.
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To curb tax evasion, the government has introduced a special mechanism for manufacturers of tobacco products, including pan masala and other tobacco preparations, requiring detailed reporting of production. Amendments in the Central GST Act through the Finance Act 2025 also allow the government to implement a comprehensive track-and-trace system for certain goods, with penalties for violations.
Meanwhile, the Group of Ministers (GoM) has sent its proposal to the GST Council for two GST rates of 5 per cent and 18 per cent across all goods, which will replace the existing four slab structure. On August 21, the proposal, placed before the six-member GoM led by Bihar Deputy Chief Minister Samrat Choudhary, aims to replace the current four rates of 5, 12, 18 and 28 per cent with just two main slabs.
Earlier this month, Prime Minister Narendra Modi announced that citizens will receive a double bonus this Diwali through a planned GST reform aimed at reducing prices of goods and services for the poor and middle class.
