Summary of this article
New excise duty, health cess effective from February 1
Levies to replace existing GST compensation cess
Tobacco, pan masala taxed higher alongside GST
The government has notified February 1 as the date from which additional excise duty on tobacco products, and a health cess on pan masala will be levied.
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.
In December, Parliament approved two Bills that allow the levy of the new Health and National Security Cess on pan masala manufacturing and the excise duty on tobacco.
The government on Wednesday notified February 1 as the implementation date for these levies. The current GST compensation cess, levied at varying rates, will cease to exist effective February 1.
