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GST On Pan Masala
The Department of Consumer Affairs has mandated that all pan masala packages, irrespective of size or weight, must display the Retail Sale Price (RSP) and other mandatory declarations under the Legal Metrology (Packaged Commodities) Rules, 2011. The amendment, notified through GSR 881(E), will come into force on February 1, 2026, an official statement said. From that date, all manufacturers, packers and importers of pan masala must ensure full compliance. The amendment removes the earlier exemption that allowed small packs of 10 grams or less to avoid certain declarations. Now, even these smaller packs must print the Retail Sale Price on their labels and display all declarations required under the 2011 rules. The previous proviso under Rule 26(a) has been withdrawn and replaced with a new proviso specific to pan masala. The department said the move strengthens consumer protection by ensuring transparent pricing information across all pack sizes. It is expected to prevent misleadin
The government is likely to introduce two bills in the Lok Sabha to replace GST compensation cess with another levy, to ensure that the tax incidence remains the same on tobacco, pan masala and other sin goods after discontinuation of the cess. The Central Excise Amendment Bill, 2025, and The Health Security se National Security Cess Bill, 2025, are listed for introduction on Monday by Finance Minister Nirmala Sitharaman. According to sources, the Central Excise Amendment Bill, 2025, will replace GST compensation cess on tobacco by levying excise duty on tobacco. The 'Health Security se National Security Cess Bill, 2025', will replace the compensation cess on pan masala. It seeks to "augment the resources for meeting Security expenditure on national security and for public health, and levy a cess for the said purposes on the machines installed or other processes undertaken by which specified goods are manufactured or produced". Currently, Goods and Services Tax (GST) at 28 per cent
GST authorities have detected 61 cases of illicit tobacco products, including cigarettes and pan masala, involving tax amounting to Rs 104.38 crore in the first quarter of the current financial year, as per government data. The Directorate General of Goods and Services Tax Intelligence (DGGI) and other authorities have detected these cases during the April-June period, it said. Besides, it said, customs field formations and Directorate of Revenue Intelligence (DRI) have seized around 3.93 crore sticks of cigarettes in the current financial year up to June 2025. According to the DRI data, seizures of smuggled cigarettes have witnessed a sharp spike between 2019-20 and 2023-24, rising by over 107 per cent in volume and more than 110 per cent in value. High-margin goods like gold, tobacco, and alcohol are heavily taxed, creating strong incentives for smuggling and tax evasion. Their high value and steady demand make them prime targets for illicit trade, often fuelled by arbitrage and
The government has notified October 1 as the date for implementation of the penalty provision for manufacturers of pan masala and similar tobacco products, if they fail to register their packing machinery with GST authorities. The GST Network had earlier in May and June notified two forms GST SRM-I and II for registering machines used by such manufacturers and to report inputs procured and corresponding outputs with tax authorities. The Central Board of Indirect Taxes and Customs (CBIC) on August 6 notified October 1, 2024, as the date for levy of up to Rs 1 lakh penalty for failure to register their packing machines with GST authorities. In January, the Central Board of Indirect Taxes and Customs (CBIC) had announced the introduction of a new registration and monthly return filing procedure to improve GST compliance for manufacturers of pan masala and tobacco products effective April 1. The date was later extended till May 15. The move to overhaul the registration, record-keeping
The government has extended the deadline for implementation of special procedure for registration and monthly return filing of manufacturers of pan masala, gutkha and similar tobacco products till May 15. Earlier in January, the Central Board of Indirect Taxes and Customs (CBIC) had announced the introduction of a new registration and monthly return filing procedure effective April 1, 2024. The move to overhaul the registration, record-keeping, and monthly filing of such businesses was aimed at improving GST compliance for manufacturers of pan masala and tobacco products. The GST law was also amended via Finance Bill 2024, to say that manufacturers of pan masala, gutka and similar tobacco products will have to pay a penalty of up to Rs 1 lakh, if they fail to register their packing machinery with the GST authorities with effect from April 1. However, this penalty provision is yet to be notified. The procedure was to be applicable for manufacturers of pan-masala, unmanufactured tob
Automated refund of Integrated GST (IGST) on export of pan masala, tobacco, and similar other items will be restricted from October 1, the finance ministry has said. Exporters of such items will have to approach jurisdictional Tax officers with their refund claims and get them cleared, as per a notification dated July 31. The changes in the notification will come into effect from October 1. Tax experts said the move is aimed at checking tax evasion in the sector, as there might be over-valuation of goods which are being exported, thus leading to higher IGST refund outgo. Manual checking of refunds will ensure that valuation is optimally done and taxes are paid at all stages. The items on which automated IGST refund restriction has been imposed include pan masala, unmanufactured tobacco, hookah, gutkha, smoking mixtures for pipes and cigarettes and other items, including mentha oil. Such items attract 28 per cent IGST, plus a cess. AMRG & Associates Senior Partner Rajat Mohan said
The government has capped the maximum rate of GST compensation cess that would be levied on pan masala, cigarettes and other forms of tobacco and linked the highest rate to their retail sale price. The capping of the cess rate was brought in as part of the amendments to the Finance Bill, 2023, which was passed by the Lok Sabha last Friday. As per the amendment, the maximum GST compensation cess rate for pan masala will be 51 per cent of the retail sale price per unit. In the current regime, the cess is charged at 135 per cent ad valorem. The rate for tobacco has been fixed at Rs 4,170 per thousand sticks plus 290 per cent ad valorem or 100 per cent of the retail sale price per unit. So far, the highest rate was Rs 4,170 per thousand sticks plus 290 per cent ad valorem. The cess is levied over and above the highest Goods and Services Tax (GST) rate of 28 per cent. Changes in schedule-I of GST compensation cess Act, brought in via amendment in Finance Bill, has capped the maximum c
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman and comprising state counterparts, will meet on February 18. "The 49th meeting of the GST Council is scheduled to be held at New Delhi on February 18, 2023," the GST Council said in a tweet on Friday. The council may take up a discussion on the report of a group of ministers on taxation of 'pan masala' and 'gutka' firms and a report by a Group of Ministers (GoM) on setting up of appellate tribunals. The report by another GoM, chaired by Meghalaya Chief Minister Conrad Sangma, for GST levy on online gaming, casinos and horse racing may come up for deliberations. These three GoM reports were part of the agenda items in the last GST Council meeting, that was held on December 17, 2022.