Cigarettes and tobacco will become more expensive now
The Central Excise (Amendment) Bill, 2025 was passed in the Lok Sabha on Wednesday in the winter session of Parliament. This bill was passed by voice vote in the Lok Sabha. Now this bill will go to Rajya Sabha. In this bill, there is a provision to impose higher excise duty on tobacco and its related products like cigarettes, chewing tobacco, hookah and zarda. But the question here is why was this bill brought?
Why was this bill brought?
Actually, this bill has been brought to maintain tax on tobacco products after the abolition of GST Compensation Cess. The government does not want the tax on these things to be reduced. Therefore, the government wants to increase the excise duty by bringing a new bill so that the use of things like cigarettes, zarda, hookah, chewing tobacco reduces and people can reduce bad habits.
The Indian government wants to increase taxes on ‘sin goods’ like tobacco, so that its use can be reduced. After the introduction of GST, a temporary cess was imposed on tobacco, which was to give compensation to the states. Now that cess is about to end, hence this bill has been brought so that excise duty can be imposed. This will generate more revenue for the government, which can be spent on health and national security.
Which products will be affected?
- Duty of Rs 5,000-11,000 per 1000 sticks depending on length on cigarettes/cigars/cheroots/
- Chewing tobacco (chewing tobacco) duty more than doubled
- 6070 percent excise duty on raw tobacco
- hookah tobacco duty up to 40%
- New duty or cess will also be imposed on cigars, zarda, pan masala etc.
What is the proposal in the bill?
In this bill, it is proposed that GST compensation cess being imposed on tobacco products like cigarettes, chewing tobacco, cigars, hookah, zarda and flavored tobacco should be removed and excise duty should be imposed in its place.
Currently, there is 28 percent GST on tobacco along with cess on various taxes. Sharad Pawar faction MP in Parliament Supriya Sule supported the bill and said that it will help in stopping smoking, but tobacco farmers will also have to be taken care of. However, small shopkeepers and tobacco farmers are worried. But the government has assured that the farmers will be taken care of. A separate plan will be made for that.
We don’t want cigarettes to be affordable – Sitharaman
Sitharaman said that some members believe that this is a cess which will benefit the Centre, whereas it is not so. He said that this is not a cess but an excise duty which will go into the divisible pool. He said that the total tax burden on cigarettes in India as per retail price has been 53 percent, whereas the WHO standard is 75. The Finance Minister said that in some countries like Australia and Britain this rate is 80 to 85 percent. He said that we do not want cigarettes to remain affordable anymore.