Excise Duty Increase: The Indian government has notified February 1, 2026 as the date from which additional excise duty would be levied on all tobacco products in the country, and a new cess on pan masala.
How much will be the Excise Duty Increase?
Cigarettes, pan masala, tobacco and similar products would attract a GST rate of a staggering 40 percent from February 1 onwards. On the other hand, beedis would attract a GST rate of 18 percent.
According to the announcement, the new excise duty would range from 2050 to 8500 Indian Rupees ($22.8-$94.5) per thousand sticks depending on product length.
Are there any other taxes or cess?
A health and national security cess would be levied on pan masala. In contrast, additional excise duty would be levied on tobacco and related products.
On Wednesday, the Finance Ministry of India also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026.
In December, the Indian Parliament had approved two bills that allow levy of the new Health and National Security Cess on pan masala manufacturing and excise duty on tobacco.
The government added that the present-day GST compensation cess that is levied at different rates will cease to exist effective February 1.
The increased costs could influence consumer behaviour, potentially boosting government revenue from GST and excise collections while reducing tobacco consumption in the country.
