From February 1, the Indian government will implement a new tax structure targeting cigarettes, tobacco products, and pan masala, as part of an effort to strengthen regulations and maintain high tax rates on these “sin goods.” This revised framework includes an additional excise duty on cigarettes and tobacco products, along with the introduction of a health and national security cess specifically for pan masala.
These measures will replace the previous tax policy, where these products were subject to a Goods and Services Tax (GST) of 28 percent coupled with a compensation cess that has been in effect since GST’s inception in July 2017. The government will also roll out a new valuation system based on Maximum Retail Price (MRP) for various tobacco items, such as chewing tobacco, filter khaini, jarda scented tobacco, and gutkha. Under this system, the GST will be calculated using the retail price displayed on the packaging rather than the factory price.
This initiative aims to curb tax evasion and enhance revenue collection. Manufacturers of pan masala will be required to register anew under the new health and national security cess law beginning February 1. In addition, they must install CCTV cameras covering all packaging machines, ensuring that video recordings are stored for a minimum of two years.
Companies will also be obligated to inform excise authorities about the number and production capacity of machines in their facilities. Should any machine remain out of operation for 15 consecutive days, manufacturers will be permitted to claim a reduction in excise duty for that duration. Despite these new regulations, the government assures that the overall tax burden on pan masala-factoring in the 40 percent GST-will remain approximately the same at around 88 percent.
Original Source: https://assamtribune.com/national/cigarettes-pan-masala-to-face-new-excise-duty-and-health-cess-from-feb-1-1606147
Category: National
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Publish Date: 2026-01-31 16:39:00
