Government Will Introduce Two Bills In The Lok Sabha To Levy Excise Duty On Tobacco Products & New Cess On Pan Masala Manufacturing

Contributing sentiments towards policy:

54% : "It is proposed to levy the Health Security se National Security Cess to contribute towards the twin purposes of enabling targeted utilisation for public health, as well as national security," according to the statement of objects and reasons of the Bill.The cess shall be in addition to any other duties or taxes chargeable on the specified goods under any law for the time being in force, it added.
53% : A 40 per cent rate was fixed for ultra-luxury goods, aerated drinks and other demerit goods.The Central Excise Amendment Bill, 2025, and The Health Security se National Security Cess Bill, 2025 will ensure that the tax incidence on sin goods like tobacco and pan masala remains the same after discontinuation of the compensation Cess.
50% : The Central Excise (Amendment) Bill, 2025, seeks "to give the government the fiscal space to increase the rate of central excise duty on tobacco and tobacco products so as to protect tax incidence," once the GST compensation Cess ends, according to the statement of objects and reasons of the Bill.The Health Security se National Security Cess Bill, 2025, seeks to levy Cess on the production of specified goods like pan masala.
50% : The levy of compensation cess was later extended by four years till March 31, 2026, and the collection is being used to repay the loan that the centre took to compensate states for the GST revenue loss during the Covid period.Since that loan repayment is going to be fully repaid sometime in December, the compensation cess will cease to exist.On September 3, 2025, the GST Council had decided to continue with the compensation cess on tobacco and pan masala till the loans taken are repaid.
49% : The Government may notify any other goods on whose manufacturing such a Cess can be levied.Sin goods like tobacco and pan masala currently attract a GST of 28 per cent, plus a compensation Cess which is levied at varied rates.Once the compensation Cess ends, sale of tobacco and related products will attract GST plus excise duty, while pan masala will attract GST plus the Health Security se National Security Cess.Since the GST rate of 28 per cent has been done away with, such sin goods will be subject to the highest GST slab of 40 per cent.

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