Archive · 1 Dec 2025
Govt Introduces Bills on Tobacco, Pan Masala
The government introduced two new bills in Parliament.
One bill will put new taxes on tobacco products like cigarettes and chewing tobacco.
The other bill will put a new tax on pan masala.
The government says these taxes will replace old ones that are ending soon.
The Opposition criticized the bills, saying they don't mention how bad tobacco is and that the new taxes won't be shared with states.
The bills will make sure that tobacco and pan masala are still taxed highly, even after the old taxes go away.
Finance Minister Nirmala Sitharaman introduced two bills in the Lok Sabha to levy excise duty on tobacco and a new cess on pan masala.
The Central Excise (Amendment) Bill, 2025, will replace the GST compensation cess on tobacco products.
The Health Security National Security Cess Bill, 2025, seeks to levy a new cess on the production of pan masala.
Opposition members criticized the bills, arguing that the harmful effects of tobacco were not mentioned and that the new cess proceeds will not be shared with states.
The bills aim to maintain the tax incidence on sin goods like tobacco and pan masala after the discontinuation of the compensation cess.
- Who
- Finance Minister Nirmala Sitharaman and Opposition members
- What
- Introduction of bills to levy excise duty on tobacco and a new cess on pan masala
- When
- December 1, 2025
- Where
- Lok Sabha, Parliament House, New Delhi
- Why
- To replace the GST compensation cess and maintain tax incidence on sin goods
Opposition
Government
Tobacco and Pan Masala Taxation
Opposition
Opposition members criticized the bills, arguing that the Central Excise (Amendment) Bill does not explicitly mention the harmful effects of tobacco and that the Health Security National Security Cess Bill does not share proceeds with states.
Government
The government aims to replace the GST compensation cess with new excise duties and a health security cess to maintain tax incidence on sin goods like tobacco and pan masala.
- Bills Introduced
- Central Excise (Amendment) Bill, 2025, and Health Security National Security Cess Bill, 2025
- Tax on Tobacco
- Excise duty on cigars/cheroots/cigarettes: Rs 5,000-11,000 per 1,000 sticks; 60-70% on unmanufactured tobacco; 100% on nicotine and inhalation products
- Tax on Pan Masala
- Health Security National Security Cess to be levied on production
- Current Tax Rates
- 28% GST plus compensation cess on tobacco and pan masala
- Future Tax Rates
- 40% GST plus excise duty on tobacco; 40% GST plus Health Security National Security Cess on pan masala
- GST Compensation Cess
- Ends after loan repayment for GST revenue loss during Covid period
- Opposition Criticism
- Tobacco's harmful effects not mentioned; cess proceeds not shared with states
Sources
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