Revamped Tax Measures for Pan Masala: A Step Towards Transparency

The Finance Ministry has announced an updated tax structure combining GST and a capacity-based cess on pan masala manufacturing. Effective February 1, this initiative aims to tackle tax evasion by aligning retail sale prices with production capabilities, thus enhancing transparency and securing tax revenue.

The Finance Ministry has unveiled a new, effective February 1, tax policy for the pan masala industry. This policy, integrating GST with a machine-capacity-based cess, aims to curtail tax evasion and ensure a reliable revenue stream.

Under this revamped tax architecture, GST will now be imposed as a percentage of the retail sale price, in conjunction with a capacity-based cess levied on manufacturers. The total tax will remain at an existing level of 88%, given by a 28% GST plus compensation cess, along with the new health and national security cess.

Sources indicate that this approach—fusing value and production capacity data—will significantly deter under-reporting and clandestine production. It relies heavily on the analysis of datasets, supported by surveillance and analytics methods, to reduce potential anomalies. Experts suggest this systematic filtering enhances transparency within the traditionally evasive sectors such as pan masala and tobacco.

(With inputs from agencies.)