Budget 2012: Smokers don't have to downgrade to bidis

The finance minister has been no kinder to those who smoke ‘regular’ sized cigarettes as opposed to those who smoke king-sized ones. But, truth to tell, it’s not too bad for them either.

“I propose to increase basic excise duty on cigarettes of more than 65mm length by adding an ad valorem component of 10 per cent to the existing specific rates. The ad valorem duty would be chargeable on 50 percent of the Retail Sale Price declared on the pack,” said the finance minister.

All the cigarettes that we smoke in India, whether regular size or king size, are over the 65 mm that the FM refers to. The regular length brands, such as Wills Navy Cut, are 84 mm, while the king size brands, such as Classic Milds, are 75 mm.

To demystify the statement, the ad valorem component would be chargeable, in the case of Classic Mild, for example, which has a retail price of Rs. 110 for a packet of 20 sticks, on Rs. 55 and on Wills Navy Cut, which retails for Rs, 88 for a packet of 20 sticks, on Rs. 44.

The 10 per cent additional ad valorem component, thus, will come to Rs. 5.50 per packet of 20 sticks for Classic Milds and Rs. 4.40 for Wills Navy Cut.

That’s less than 30 paise per stick, whatever your brand. No need to switch to bidis.