Additional Excise Duty on Tobacco from February 1
The government has announced an important change in the taxation of tobacco and pan masala products. From February 1, a new tax structure will come into force, replacing the existing compensation cess. This move aims to impose higher levies on sin goods through additional excise duty and a new cess, over and above GST, with implications for prices, revenue, and public health policy.
The Centre has officially notified February 1 as the date from which additional excise duty on tobacco products and a Health and National Security Cess on pan masala will be levied. These new taxes will replace the compensation cess currently charged on these products.
The government has introduced two major changes,
From February 1, the tax structure will be,
On top of GST,
The new levies will replace the compensation cess that was earlier imposed on sin goods under GST. The compensation cess was originally introduced to compensate states for revenue losses after GST implementation. With this change, tobacco and pan masala will now be taxed through a different mechanism.
In December, Parliament of India approved two Bills that allow,
Sin goods like tobacco, alcohol and pan masala are taxed heavily in India to,
Under Goods and Services Tax, such products attract higher GST slabs along with cesses or excise duties.
| Aspect | Details |
| Why in News? | New excise duty and cess notified |
| Products Affected | Tobacco, cigarettes, pan masala, biris |
| GST Rate | 40% (tobacco, pan masala), 18% (biris) |
| Additional Levy | Excise duty (tobacco), Health & National Security Cess (pan masala) |
| Replaces | Compensation cess |
| Effective Date | February 1 |
Q. From which date will additional excise duty on tobacco products be levied?
A. January 1
B. February 1
C. March 31
D. April 1
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