Government Announces New Excise Duty and Health Cess on 'Sin Goods'

The government will implement additional excise duties and a health cess on tobacco products and pan masala from February 1, replacing the existing GST compensation cess. Tobacco products will face an additional excise duty, while pan masala will incur a health cess, aiming to generate funds for health and national security.

The government has announced that starting February 1, additional excise duties on tobacco products and a health cess on pan masala will replace the current GST compensation cess on these goods, often referred to as 'sin goods'.

For tobacco products, an added excise duty will be applied, while pan masala manufacturers will face a health cess based on production capacity. Cigarettes will see varied excise rates depending on their size and filter, adding to a 40% GST rate and a compensatory cess.

This move, outlined by Finance Minister Nirmala Sitharaman, intends to create a dedicated funding stream for health and national security, following approvals by Parliament and decisions by the GST Council.

(With inputs from agencies.)