Centre Proposes New Cess on Tobacco & Pan Masala to Replace Expiring GST Compensation Levy

Brief by Shorts91 Newsdesk / 03:37am on 01 Dec 2025,Monday India

The government plans to introduce Central Excise Amendment Bill, 2025 and Health Security and National Security Cess Bill, 2025 in parliament to replace the existing GST‑compensation cess on tobacco, cigarettes and pan masala. Currently, these “sin goods” carry 28% GST plus a compensation cess — a 2025 tax overhaul after most goods shifted to lower GST slabs. The new bills aim to maintain high tax incidence on tobacco and pan masala by replacing the cess with either excise duties or a special “health and security cess.” The revenue collected will help fund public‑health and national‑security expenditure while ensuring that prices of harmful products don’t drop after cess expiry. (PC: PTI)

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