₹104 crore tax evasion by tobacco dealers detected this fiscal year, says govt

The authorities have detected 61 cases of tax evasion by dealers of tobacco products such as gutka, cigarettes and pan masala across the country, amounting to ₹104.38 crore till June this financial year.

The information was provided to the Lok Sabha on Friday in response to a question on whether the government has assessed the extent of tax evasion, illicit trade and unregulated manufacturing in the Zarda sector.

Tough to estimate revenue loss

In a written reply, Minister of State for Health Prataprao Jadhav stated that the Department of Revenue has informed that the illegal trade of tobacco products is a clandestine activity, making it difficult to accurately estimate the loss of revenue.

However, Jadhav’s reply confirmed that “Central Goods and Services Tax (CGST) zones and Directorate General of Goods and Service Tax Intelligence (DGGI) have detected 61 cases of (tax evasion by) gutka/chewing tobacco/cigarettes/pan masala (entities) involving tax amounting to approximately ₹104.38 crore in the current financial year up to June 2025."

Enforcement actions and compliance

Regarding steps taken to strengthen the enforcement action, Jadhav explained that the DGGI and CGST officers have been sensitised to deal with the issue.

Their focus is on verifying and enhancing the level of compliance of registered taxpayers as well as identifying unregistered entities to bring them under the tax net.

Regulatory framework for tobacco products

Jadhav also clarified the regulatory landscape surrounding tobacco products.

• Pan Masala standards: The standards for pan masala are prescribed under sub-regulation 2.11.5 of the Food Safety and Standards (Food Product Standards and Food Additives) Regulations, 2011. Manufacturers are required to comply with these specifications.
• Gutka standards: It was also noted that no standards of gutka are prescribed under this specific regulation.

• Prohibition of Tobacco in food: Food Safety and Standards (Prohibition and Restriction of Sales) Regulation, 2011, prevents the use of tobacco and nicotine as ingredients in food products.