When you are paying Rs.17/- to buy a cigarette from the shop, you must be thinking that you are buying the best and so you are taking care of your health adequately. An enjoyment of four minutes cost you Rs. 17/-   and that is almost the highest price you can spend on a cigarette as on date and for a thirteen-puff enjoyment. You are a responsible person, you believe in relationships and its value. So you cannot compromise with the future of your family and therefore, you are paying the highest to ensure the harmless quality of the product. Also, a grasping feeling like a King obsessed you while smoking a King Size cigarette, a feeling that you are not a Standard person or common person like those who smoke Standard Size cigarettes.

Let us today examine what you are paying when you buy a cigarette and what you are getting. Let us agree without going into any argument that material cost which includes tobacco, cigarette paper, filter rod, cork tipping paper, gum, packets, foil, BOPP wrap paper, etc. plus labor cost for one cigarette comes to Rs 3.40. So, let us see how Rs 3.40 grows into Rs 17.00 for a stick.

1. The material and manufacturing cost of 1 stick of cigarette-Rs 3.40
2. Profit of manufacturer per stick -Rs 2.00
3. Invoice Rate per stick-Rs 5.40
4. Invoice Rate per 1000 stick-Rs 5400.00
5. Central Excise Duty @ Rs 10.00 per 1000 sticks -Rs10.00
6. NCCD @ Rs 735.00 per 1000 sticks-Rs 735.00
7. Total of Invoice Rate, CE Duty, NCCD for 1000 sticks (4+5+6) -Rs 6145.00
8. GST @ 28% on Rs 5985.00-Rs1720.60
9. Total of Invoice Rate, CE Duty, NCCD, GST (7+8)-Rs7865.60
10. Variable Compensation Cess @36% on Rs 7660.00-Rs 2831.60
11. Fixed Compensation Cess @ Rs 4170 per 1000 sticks -Rs 4170.00
12. Total of CE Duty and GST for 1000 sticks (5+6+8+10+11)-Rs 9467.00
13. Tax Invoice Price of 1000 sticks (4+12)  -Rs14867.00
14. Price per stick for Distributor-Rs 14.86
15. Pan Shop’s selling price for one stick-Rs 17.00
16. Sales expenses (Distributor, Dealer, Pan Shop)-Rs 2.14

Summery:

• Smoker pays for one stick of cigarette Rs 17.00
• From Rs 17.00, Government collect Duty and Tax Rs 9.46
• From Rs 17.00, manufacturer makes a profit of Rs 2.00
• From Rs 17.00, Sales expenses go Rs 2.14
• Smoker smokes a cigarette worth Rs 3.40

So, you consume a product worth Rs.3.40 and expect it to harmlessly satisfy you. One can imagine the purchasing strength of Rs 3.40 in today’s market. Just think of it.

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