Finance Minister Nirmala Sitharaman will introduce two new bills for taxation on unhealthy products like cigarettes, gutkha and pan masala in the winter session of Parliament. The Central Excise Amendment Bill, 2025, will replace the GST Compensation Cess, which is currently levied on all tobacco products such as cigarettes, chewing tobacco, cigars, hookah, zarda and flavored tobacco. At the same time, the Health Security National Security Cess Bill, 2025 provides for imposition of cess on the production of specific items like Pan Masala.
From health safety to national security, under the Cess Bill, 2025, cess will now be levied on the capacity of the machine, the number of times the machine runs and other aspects related to production. There is going to be a big change in the GST rate under this bill. GST on tobacco products will increase from the earlier 28 percent plus compensation cess to 40 percent plus compensation cess. Currently, compensation cess ranges from 5 percent to 290 percent depending on the product. However, even after the increase in GST rate, there will be no change in the tax paid by consumers.
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For example, a particular type of cigarette currently attracts 28 per cent GST along with 290 per cent compensation cess, i.e. a total tax of 318 per cent. After the change, GST will remain at 40 percent but compensation cess will reduce to 278 percent. In this way the consumer will have to pay only 318 percent tax on that cigarette. The government will notify the rules after the bill is passed by Parliament and signed by the President.
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SP-CPI(M)’s warning of not allowing Parliament to run on SIR
Samajwadi Party MP Ram Gopal Yadav and CPI(M) MP from West Bengal John Brittas warned of not allowing Parliament to function if the SIR was not discussed. The winter session of Parliament will start from Monday. Ram Gopal said that if the government is not ready to discuss SIR, we will not allow Parliament to function. At the same time, John Brittas said that even in the name of electoral reforms, the government should accept the demand for discussion on SIR.
