New Excise Duties Proposed on Tobacco and Pan Masala to Replace GST Cess

The Indian Finance Ministry introduced two bills in Lok Sabha to enforce excise duty on tobacco and a new cess on pan masala, substituting the GST compensation cess. These measures aim to retain the tax incidence on such products once the compensation cess is phased out.

In a significant move, Finance Minister Nirmala Sitharaman unveiled two new bills in the Lok Sabha aimed at introducing excise duty on tobacco and instituting a new cess on pan masala manufacturing. This initiative is set to replace the GST compensation cess on these 'sin goods' as it phases out.

The Central Excise (Amendment) Bill, 2025 seeks to revise the fiscal framework by imposing excise duties on various tobacco products. Once the GST compensation cess concludes, these products are poised to see continued tax presence, supporting governmental revenue needs.

Additionally, the Health Security and National Security Cess Bill, 2025, is poised to impose a production cess on pan masala and potentially other goods, maintaining public health funding while addressing national security concerns.

(With inputs from agencies.)