Bad news has come for people who use tobacco and its related products. According to the information, the cess imposed separately along with GST on these products will remain applicable till January 2026. Earlier its deadline was till November 2025. According to the information, the payment of the outstanding compensation loan has not been completed yet. In such a situation, this cess has been extended for two more months. By the way, the government or rather the GST Council has removed all types of cess under the GST reform.
Decrease in cess revenue
In fact, after the GST reform, which came into effect from September 22, 2025, GST compensation cess on many items has been abolished. But tobacco and related products (cigarettes, beedis, pan masala, chewing tobacco, etc.) were banned. Cess is now limited to tobacco products only, hence the cess collection has declined from Rs 11,652 crore in September 2025 to Rs 7,812 crore in October 2025, which is a decline of 33 percent. An official said some more time may be required to complete the loan and interest repayments, but it will be completed by January 2026.
The decision was taken from
On September 3, the GST Council decided that pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and beedis will continue to attract the existing rates of GST and compensation cess, where applicable, until the loan and interest under the compensation cess account is repaid. Officials have indicated that a special duty will be imposed on these items after the abolition of cess, so that the effective tax weight on these products remains the same. The GST Council will take the final decision on the cess, including the exact expiry date for tobacco products. From September 22, cess has been removed from luxury cars, aerated beverages, coal and many luxury and hazardous items. For many goods, the cess has been merged into a new, 40 per cent GST rate.
Was implemented for 5 years
After the implementation of GST in July 2017, this cess was implemented for 5 years to compensate for the potential revenue loss based on the benchmark growth rate. From July 2022, the cess has not gone to the states, but has been used to repay the ongoing loans of Rs 2.69 lakh crore taken by the Center in FY 2021 and FY 2022 to compensate the states under the guaranteed revenue arrangement.