The Centre on Wednesday notified February 1 as the date from which higher levies on tobacco products and a new cess on pan masala will come into force.
Under the new regime, the additional taxes will be charged over and above the existing Goods and Services Tax (GST) rates and will replace the GST compensation cess currently imposed on these so-called sin goods. From February 1, pan masala, cigarettes, tobacco and similar products will attract a GST rate of 40 per cent, while biris will be taxed at 18 per cent, as per the notification.
In addition to GST, pan masala will be subject to a newly introduced Health and National Security Cess, while tobacco and allied products will face an additional excise duty.
Finance Ministry Notifies New Rules
The Finance Ministry also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026, laying down the framework for assessment and collection of duty on these products.
Parliament had cleared two Bills in December, enabling the levy of the Health and National Security Cess on pan masala and the imposition of excise duty on tobacco products. With the notification issued on Wednesday, these provisions will be implemented from February 1.
The existing GST compensation cess, which is currently levied at varying rates on tobacco and pan masala, will be withdrawn from the same date.
