• Source:JND
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Tax Hike On Tobacco Products: On the first day of the winter session of Parliament, the central government brought bills to impose a new cess on pan masala products. Finance Minister Nirmala Sitharaman introduced two bills in the Lok Sabha on Monday to impose excise duty on tobacco and tobacco products and a new cess on pan masala manufacturing. This cess will replace the GST compensation cess on harmful products like tobacco, Jagran Business reported.

The Central Excise (Amendment) Bill, 2025, will replace the GST compensation cess, which is currently levied on all tobacco products such as cigarettes, chewing tobacco, cigars, hookah, zarda and scented tobacco.

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What's The Aim Of The Bill

The bill aims to "provide fiscal space to the government to increase the rate of central excise duty on tobacco and tobacco products to protect the tax, after the GST compensation cess is abolished". The Health and National Security Cess Bill, 2025, provides for the imposition of a cess on the production of specified items like pan masala. Hazardous items like tobacco and pan masala currently attract a GST of 28 per cent, along with a compensation cess at varying rates.

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When Will New Rates Be Applicable?

After the compensation cess is abolished, the sale of tobacco and related products will attract 40 per cent GST and excise duty, while pan masala will attract 40 per cent GST and a health safety and national security cess. The Central Excise Amendment Bill proposes to levy excise duty on cigars/cheroots/cigarettes ranging from Rs 5,000 to Rs 11,000 per 1,000 sticks. Furthermore, it proposes to impose 60-70 per cent excise duty on unmanufactured tobacco and 100 per cent excise duty on nicotine and inhalant products.

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