NewzVille Desk
The government has imposed an additional excise duty on cigarettes and other tobacco products effective February 1.
The hike in excise duty on cigarettes will ensure that cigarettes carry a tax burden proportionate to their severe public health impact, and also maintain a tax incidence closer to international best practices.
The levy of such a cess on pan masala and excise duty on tobacco was approved by Parliament on the winter session.
The Finance Ministry has notified amendments to the Central Excise Act imposing an excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks based on cigarette length. This duty will be over and above 40 per cent GST.
The ministry has also notified the Health and National Security Cess Act, levying cess on the manufacturing capacity of pan masala-related businesses from February 1.
The total tax incidence on pan masala, after taking into account 40 per cent GST, will be retained at the current level of 88 per cent.
Chewing and jarda scented tobacco, and gutkha will attract an excise duty of 82 per cent, and 91 per cent, respectively.
From February 1, tobacco products including pan masala and cigarettes – will attract 40 per cent GST, while biris (rolled tobacco leaves) will be taxed at 18 per cent.
The finance ministry has also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2025.
Manufacturers will have to install a functional CCTV system covering all packing machines and preserve the footage for at least 24 months.
Such manufacturers will also have to disclose to the excise authorities the number of machines and their capacities. These norms, too, would be effective February 1.
