Government Introduces Tax Bills on Tobacco and Pan Masala

The Indian government is planning to introduce two new bills in the upcoming Winter Session of Parliament.

The first bill, The Central Excise (Amendment) Bill, 2025, will increase the excise duty on tobacco products like cigarettes and other tobacco items.

The second bill, The Health Security and National Security Cess Bill, 2025, will apply to pan masala and similar products.

The new cess will be levied on machines or manufacturing processes used to produce these goods.

The money from these taxes will be used for public health and national security.

The government is also planning to raise the foreign direct investment (FDI) limit in the insurance sector to 100% from 74%.

The Winter Session of Parliament is scheduled from December 1-19.

The GST rate on all sin goods was capped at 40% under GST 2.0, which was rolled out on September 22, 2025.

Tobacco and pan masala were kept out of this reset because states are still being repaid the massive Covid-era compensation loans.

Once those loans plus interest are fully repaid, expected by March 31, 2026, the old compensation cess on tobacco will automatically expire.