Tobacco products and pan masala are set to be taxed more from February 1 this year, the Centre said late on Wednesday, in a bid to curb usage of these products.
The new extra charges on tobacco products and pan masala will be levied on top of the recently revamped Goods and Services Tax (GST) rate for ‘sin goods’. The latter will also replace the compensation cess, that is currently being levied on such products.
This would mean 40 per cent GST, plus additional excise duty, which is reportedly expected to take the price of a single cigarette from Rs 15-20 to about Rs 72—meaning that a 20-cigarette pack would cost more than Rs 1,400.
For pan masala, however, a Health and National Security Cess will be levied, instead of the additional excise duty.
The GST rate for in beedihowever, is 18 per cent—reportedly kept low to protect the livelihoods of people (mostly those from rural areas) working in the beedi industry.
The Finance Ministry on Wednesday also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026.
These rules lay out ways to determine production capacity as well as norms for the collection of central excise duty on goods like chewing tobacco (including filter khaini), yard scented tobacco, and gutkha.
Notably, 53 per cent of the price of a cigarette goes into taxes, which is still well below the World Health Organization (WHO) benchmark of 75 per cent.
The February 1 GST rate comes months after the GST Council in September announced a special third tax slab in the new GST regime on aerated drinks, ultra-luxury goods, and sin goods like tobacco products.
ALSO READ | What are sin goods? Nirmala Sitharaman announces 40 pc GST on these items
At the time, the Centre had said that the existing 28 per cent GST would continue until loan dues were cleared.
Comments are closed.