In a landmark legislative move, the Indian Parliament latest news confirms the swift passage of the Central Excise (Amendment) Bill, 2025. Introduced in the Lok Sabha on December 1, 2025, and passed by both houses within days, this pivotal legislation is set to significantly increase the tobacco duty India, impacting a wide array of tobacco and related products. What does this mean for consumers, public health, and fiscal policy India? Let’s dive deep into the amendments and their implications.
The primary objective behind the Central Excise Amendment Bill 2025 is to safeguard public health while maintaining robust revenue generation. With the impending discontinuation of the Goods and Services Tax (GST) compensation cess, a critical component of the previous tax structure on “sin goods” like tobacco, there was a looming risk of overall tax incidence on these harmful products decreasing. To prevent increased affordability and subsequent higher consumption, the government has acted decisively to revise excise duty rates. This strategic adjustment ensures that the existing level of taxation on tobacco products is sustained, aligning with broader public health India initiatives.
Specific Duty Increases: A Detailed Breakdown
The Bill introduces substantial increases across various categories of tobacco. For unmanufactured tobacco, such as sun-cured leaves, the duty is set to rise from 64% to 70%. Manufactured tobacco products will see even more dramatic changes:
- Chewing tobacco will experience a significant hike, with duty soaring from 25% to 100%.
- Hookah or gudaku tobacco duty will increase from 25% to 40%.
- Smoking mixtures for pipes and cigarettes face a steep climb, with duties proposed to jump from 60% to 325%.
Perhaps the most notable change comes for cigarettes. The excise duty will now range substantially from ₹2,700 to ₹11,000 per thousand cigarettes, a massive increase from the previous range of ₹200 to ₹735 per thousand. These cigarette tax increase measures are a clear signal of the government’s commitment to discouraging tobacco use.
Impact on India’s Taxation Framework
This amendment is crucial within India’s current taxation framework India. While many central excise duties were abolished with the introduction of GST in 2017, certain items like tobacco, liquor, and petroleum remained under the excise regime. Tobacco products, categorized in the 40% GST demerit category, would not sustain a high tax incidence without the compensation cess. By shifting the burden to central excise duty, which is part of the divisible pool, states will automatically receive their share of the increased revenue. This proactive approach, alongside the Health Security and National Security Cess Bill, 2025, solidifies India’s strategy to maintain high taxation on “sin goods” and advance tobacco control measures. Finance Minister Nirmala Sitharaman highlighted that this move brings India closer to the World Health Organization’s benchmark of 75% tax incidence on tobacco, addressing the previously high affordability index that undermined public health goals.
Broader Implications for Public Health and Fiscal Policy
The Central Excise (Amendment) Bill, 2025 marks a significant milestone in India’s ongoing efforts to curb tobacco consumption and secure its financial future post-GST compensation cess. By increasing excise duty rates on various tobacco products India, the government aims to make these harmful items less affordable, thereby protecting citizens from their ill effects and bolstering sustainable fiscal policy. This legislative action underscores a firm commitment to public health and a robust approach to managing the nation’s revenue streams
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