New cess and tax will be applicable on Cigarettes and Pan Masala from February 1.
Additional excise duty on tobacco products and health cess on pan masala will be applicable from February 1. According to the information given by the government, the new taxes on tobacco and pan masala will be in addition to GST. This will replace the compensation cess which is currently being imposed on such harmful products. According to the government notification, from February 1, GST on pan masala, cigarettes, tobacco and similar products will be 40 percent, while beedis will attract 18 percent Goods and Services Tax (GST). Additionally, Health and National Security Cess will be imposed on Pan Masala while additional excise duty will be imposed on tobacco and related products.
Approval was received from Parliament in December
The Finance Ministry on Wednesday notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Fee) Rules, 2026. Parliament had approved two bills in December that allow for a new health and national security cess on making pan masala and excise duty on tobacco. The government informed on Wednesday that these fees will be implemented from February 1. The existing GST compensation cess, which is levied at different rates, will end from February 1.
GST compensation cess abolished
Under this change, the existing GST compensation cess on tobacco and pan masala will end from February 1. This compensation cess was originally introduced to compensate for the revenue loss suffered by the states after the implementation of GST. By replacing it with a combination of cess and excise duty, the central government is reshaping the taxation structure for tobacco and pan masala, while continuing to impose heavy taxes on products considered harmful to public health. These changes, once implemented early this year, are expected to impact manufacturers, prices and consumption patterns.
decline in company shares
There has been a decline of about 10 percent in the shares of ITC, the gold flake manufacturing company and the largest cigarette manufacturing company in the market. After which the company’s share has come down to Rs 365. This means that the company’s shares have reached their lowest level in more than 18 months. On the other hand, shares of Marlboro distributors Godfrey Phillips India have seen a decline of more than 15 percent. Due to which the shares of the company have come down to Rs 2,335. Whereas on Wednesday the company’s shares were at 2,761.55.