Taxes on tobacco: The Indian government announced that new taxes on tobacco products and pan masala will take effect on February 1.
The additional excise duty on tobacco and a new cess on pan masala will be charged on top of GST rates and will replace the current compensation cess on these products. Starting February 1, pan masala, cigarettes, tobacco and similar products will be taxed at 40 per cent GST, while bidis will face an 18 per cent GST rate, according to a government notification.
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A Health and National Security Cess will apply to pan masala, and tobacco products will be subject to additional excise duty.
The Finance Ministry also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026.
Parliament approved two bills in December authorising the new Health and National Security Cess on pan masala manufacturing and excise duty on tobacco.
The GST compensation cess, currently levied at varying rates, will end on February 1.
