The Central Excise (Amendment) Act, 2025:
The Centre has notified the Central Excise (Amendment) Act, 2025 and related tax changes on tobacco products, effective February 1, 2026.
- The Central Excise (Amendment) Act, 2025 amends the Central Excise Act, 1944 to revise excise duties on tobacco and tobacco-related products, which remain outside the full GST framework.
- The move ends the GST compensation cess, revises excise duties, and aims to raise tobacco prices in line with public health and fiscal objectives.
Key features of the Act:
- Updates central excise duties on tobacco to maintain and enhance the overall tax burden after the end of GST compensation cess.
- Higher duties on tobacco products:
- Unmanufactured tobacco: 64% → 70%
- Chewing tobacco: 25% → 100%
- Hookah/gudaku tobacco: 25% → 40%
- Smoking mixtures for pipes/cigarettes: 60% → 325%
- Cigarettes: From ₹200–₹735 to ₹2,700–₹11,000 per thousand sticks
- Public health objective: Aligns with global guidance to ensure real cigarette prices rise faster than incomes.
- GST rate restructuring:
- Beedis: Moved to 18% GST
- All other tobacco products: Moved to 40% GST
- New valuation mechanism: GST value based on retail sale price declared on the package for chewing tobacco, gutkha, khaini, jarda, etc.
