Additional excise duty on tobacco, health cess on pan masala to be effective February 1

The government on Wednesday (December 31, 2025) notified February 1 as the date from which additional excise duty on tobacco products and a new cess on pan masala will be imposed.

The new duties on tobacco and pan masala will be in addition to the GST rate and will replace the compensation cess that is currently being levied on such harmful goods.

According to a government notification, from February 1, pan masala, cigarettes, tobacco and similar products will attract a GST rate of 40%, while beedis will attract 18% Goods and Services Tax (GST).

Additionally, health and national security cess will be imposed on pan masala, while tobacco and related products will attract additional excise duty.

The Finance Ministry on Wednesday also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Fee) Rules, 2026.

Parliament in December had approved two bills allowing the imposition of a new health and national security cess on pan masala manufacturing and excise duty on tobacco.

The government on Wednesday notified February 1 as the date of implementation of these charges. The existing GST compensation cess, which is currently levied at various rates, will cease to be effective from February 1.