Cigarettes, Pan Masala Price: The Central Excise (Amendment) Bill, 2025 was approved in the Lok Sabha on Wednesday during the winter session of Parliament. The bill received a voice vote in the Lok Sabha and will now move on to the Rajya Sabha. This legislation aims to increase excise duties on tobacco and related products, such as cigarettes, chewing tobacco, hookah, and zarda. But why was this bill introduced?

Why was this bill brought?

This bill was put forward to sustain the tax on tobacco products after the GST compensation cess was eliminated. The government aims to prevent a reduction in taxes on these items. Hence, they are looking to raise the excise duty through this new bill to discourage the use of products like cigarettes, tobacco, hookah, and chewing tobacco, while promoting healthier habits.

The Indian government is keen on hiking taxes on “sin goods” like tobacco to lower its consumption. After the GST was implemented, a temporary cess was placed on tobacco to help states. With that cess nearing its end, this bill has been introduced to establish an excise duty. This move is expected to boost government revenue, which can then be allocated to health and national security initiatives.

Which products will be affected?

A duty ranging from Rs 5,000 to Rs 11,000 per 1000 sticks on cigarettes, cigars, and cheroots, depending on their length.
The duty on chewing tobacco has more than doubled.
There will be a 60.70 percent excise duty on raw tobacco.
The duty on hookah tobacco will rise to 40%.
Additionally, new duties or cesses will be applied to cigars, tobacco, pan masala, and more.

What is proposed in the bill?

This bill suggests that the GST compensation cess currently applied to tobacco products like cigarettes, chewing tobacco, cigars, hookah, zarda, and scented tobacco should be eliminated and substituted with an excise duty. At present, tobacco is subject to a 28 percent GST, along with various other taxes and cesses. In Parliament, MP Supriya Sule, affiliated with Sharad Pawar, expressed support for the bill, noting that it would aid in reducing smoking, but also emphasized the need to support tobacco farmers. However, small shopkeepers and tobacco farmers are concerned. However, the government has assured that farmers will be taken care of and a separate plan will be developed for them.