नवीनतम
FM introduces Bills for new cess on tobacco, pan masala
NEW DELHI [Maha Media]: Union Finance Minister Nirmala Sitharaman on Monday introduced two significant bills in the Lok Sabha aimed at restructuring taxation on tobacco products and pan masala. The Central Excise (Amendment) Bill, 2025, proposes to replace the existing GST compensation cess on tobacco products, while the Health Security and National Security Cess Bill, 2025, seeks to impose a new cess on the manufacturing of pan masala.
In the Object and Reasons of the bills, Sitharaman explained that the Central Excise (Amendment) Bill would “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,” following the eventual discontinuation of the compensation cess once liabilities are cleared. The bill covers various tobacco products, including cigarettes, chewing tobacco, cigars, hookahs, zarda, and scented tobacco.
Since the introduction of the Goods and Services Tax (GST) in 2017, the Central Excise Act, 1944, was repealed except for specific goods like tobacco. To maintain revenue neutrality and fiscal balance, compensation cess was levied on tobacco products, necessitating this amendment to adjust excise duty rates accordingly.
The Health Security and National Security Cess Bill targets pan masala production, proposing a levy based on the production capacity of machines or hybrid processes rather than the quantity produced. Manufacturers would self-declare machine and process details for each factory, with provisions for verification and recalibration by authorized officials. Compliance will be ensured through a combination of technological monitoring and inspections.
Both bills aim to bolster government revenue while supporting public health and national security initiatives. Sitharaman’s introduction of these bills signals the government’s commitment to refining the taxation framework on ‘sin goods’ and aligning fiscal policies with broader health and security objectives.
