Tobacco

From the finance ministry came a mix of revenue-raising and trade-defence actions. Taxes on tobacco products will increase from the beginning of next month

From February 1, 2026, cigarettes and tobacco products will be taxed under a new excise framework. The government has scrapped the GST compensation cess and replaced it with a new excise duty,

The Federation of All India Farmer Associations (FAIFA) on Friday said the government's move to levy additional excise duty on tobacco products will hurt farmers' income and exacerbate smuggling in a market already grappling with illicit trade. The finance ministry last month notified excise duties of Rs 2,050-8,500 per 1,000 cigarette sticks depending on length, effective February 1, under the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026. FAIFA, representing growers across Andhra Pradesh, Telangana, Karnataka and Gujarat, said the duty increase contradicts the government's assurances of revenue-neutral tax reform. "We are shocked to see that the promise has not been kept, and instead a sharp increase in taxes has been notified, at the cost of farmers' livelihoods," FAIFA President Murali Babu said in a statement. The farmers' body warned that higher retail prices will reduce legal cigarette consumpti

The Tobacco Institute of India calls on the government to reconsider the steep excise and GST hike on tobacco, warning of hardships for farmers, MSMEs, retailers and a surge in illicit trade

From February 2026, India replaces GST compensation cess with excise and health cess on tobacco and pan masala, introducing capacity-based duties and higher cigarette taxes

Shares of cigarette makers fell sharply after the Centre announced higher GST and excise duties on tobacco products from February, raising concerns over price hikes, volumes and margins

Manufacturers of chewing tobacco, gutkha and similar products will have to install a functional CCTV system from February 1, covering all packing machines and preserve the footage for at least 24 months, according to a government notification. Such manufacturers will also have to disclose to excise authorities the number of machines and their capacities, and can also claim abatement in excise duty in case a machine is non-functional for a minimum of 15 consecutive days, according to the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules notified by the Finance Ministry. The Rules will apply to manufacturers who pack such goods in pouches. "Those manufacturing in other forms (such as tins) have to pay the applicable duty on assessable value," an FAQ released by the Ministry said. The Ministry, on December 31, 2025, notified the additional excise duties that would be levied on chewing tobacco and related products,

The government on Wednesday notified February 1 as the date from which additional excise duty will be levied on tobacco products, and a new cess on pan masala. The new levies on tobacco and pan masala will be over and above the GST rate, and will replace the compensation cess which is currently being levied on such sin goods. From February 1, pan masala, cigarettes, tobacco and similar products will attract a GST rate of 40 per cent, while biris will attract 18 per cent Goods and Services Tax (GST), according to a government notification. On top of this, a Health and National Security Cess will be levied on pan masala, while tobacco and related products will attract additional excise duty. The Finance Ministry on Wednesday also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026. Parliament had in December approved two Bills allowing levy of the new Health and National Security Cess on pan masa

Parliament on Monday approved a bill seeking cess on manufacturing units of pan masala to augment expenditure on national security and public health. The Rajya Sabha returned the Health Security se National Security Cess Bill, 2025, to the Lok Sabha. The bill was approved by the Lower House on Friday. The cess will be over and above the GST, and will be levied on the production capacity of machines in pan masala manufacturing factories. Replying to the debate on the bill, Finance Minister Nirmala Sitharaman said the cess is intended to serve the cost of national and health security.

While the minister said the Centre had surrendered its power to levy excise duty on tobacco in 2017, excise duty did continue after GST - though at a nominal level

The Centre has introduced two major taxation Bills aimed at increasing excise duty on tobacco products and imposing a new capacity-based cess on pan masala.

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

Tobacco products currently fall under the highest GST slab of 28 per cent, along with a compensation cess that varies depending on the product type

Distributors of aerated drinks and cigarettes told the Finance Ministry that cess accumulation under the new 40 per cent GST regime is blocking working capital and hitting liquidity

In 2024, the Haryana Assembly passed a bill amending the Cigarettes and Other Tobacco Products Act to ban hookah bars across the state

New levy could follow full repayment of GST compensation loans, keeping overall tax incidence on tobacco products high

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 petition claims that banned plastic packaging materials are still being used and calls for strict enforcement of existing regulations

Marroco also confirmed that BAT would keep its two directors on the ITC board so that it has an influence

Smoking and hookah don't just harm your lungs and heart-doctors warn they also quietly damage sexual function, disrupt hormones, and reduce fertility in both men and women