New GST Rates: New GST rates will be implemented on some products tomorrow, February 1st . This will result in an increase in their prices. These new GST rates will apply to tobacco-related products. Although the new GST rates were originally implemented on September 22, 2025, the new GST rates on harmful products will be implemented on February 1st.
According to a report, an additional excise duty on cigarettes and tobacco products and a health cess on pan masala will come into effect from February 1. This will be levied on top of the highest GST rate of 40 percent. These cesses and excise duties will replace the 28 percent GST and compensation cess that were in effect on these harmful items from July 1, 2017.
These items will become expensive from today
Additionally, a new system of maximum retail price (MRP)-based valuation will be implemented for tobacco products (chewing tobacco, filter khaini, zarda-containing scented tobacco, and gutkha) from February 1. Under this, GST will be determined based on the retail selling price declared on the package.
Pan masala manufacturers will have to obtain a new registration under the Health and National Security Cess Act from February 1. Manufacturers of such products will have to install a functional CCTV system covering all packing machines and preserve its footage for at least 24 months.
They must also report the number of machines and their capacity to excise officials. If a machine remains out of service for at least 15 consecutive days, they can claim a rebate on excise duty.
Excise duty will be levied based on the length of the cigarette. The Central Excise Act, effective from February 1, has been amended to impose excise duty ranging from Rs 2.05 to Rs 8.50 per stick depending on the length of the cigarette.
New Cigarette Rate
Additionally, the Health and National Security Cess Act imposes a cess on the production capacity of pan masala units. After including the 40 percent GST, the total tax burden on pan masala remains at the current level of 88 percent.