The government has announced an important change in the taxation of tobacco and pan masala products

¨     The government has announced an important change in the taxation of tobacco and pan masala products. From February 1, a new tax structure will come into force, replacing the existing compensation cess.

¨     This move aims to impose higher levies on sin goods through additional excise duty and a new cess, over and above GST, with implications for prices, revenue, and public health policy.

¨     The Centre has officially notified February 1 as the date from which additional excise duty on tobacco products and a Health and National Security Cess on pan masala will be levied. These new taxes will replace the compensation cess currently charged on these products.

The government has introduced two major changes

¨     Additional excise duty on tobacco and related products

¨     A new Health and National Security Cess on pan masala

These levies will be imposed in addition to GST and will come into effect from February 1, as per the notification issued after parliamentary approval.

New Tax Rates on Tobacco and Pan Masala

¨     Pan masala, cigarettes, tobacco and similar products: 40% GST

¨     Biris: 18% GST