| Event/Highlight | Details |
|---|---|
| Central Excise (Amendment) Bill, 2025 | Replaces GST compensation cess on tobacco products with fresh central excise duty. Includes cigarettes, cigars, cheroots, hookahs, zarda, and scented tobacco. Excise duty ranges from ₹5,000-₹11,000 per 1,000 sticks. |
| Health and National Security Cess Bill, 2025 | Introduces dedicated cess on pan masala and other notified products. Proceeds allocated to public health programmes and national security funding. Not shared with states. |
| Objective | Ensure revenue continuity post-phaseout of GST compensation cess (March 31, 2026). Maintain high taxation on demerit goods. Shift revenue to targeted public health and national security spending. |
| GST Compensation Cess Phaseout | Introduced July 1, 2017, to compensate states for GST revenue losses. Initially set for 5 years, extended till March 31, 2026, to repay pandemic-related loans. Compensation cess on luxury goods withdrawn in September 2025. |
| New Tax Structure | Excise duty on cigarettes: ₹5,000-₹11,000 per 1,000 sticks. 60-70% duty on unmanufactured tobacco. 100% duty on nicotine products. Additional 40% GST remains applicable. |
| Broader Impact | Ensures fiscal discipline, discourages harmful products, and repays pandemic-related loans without burdening core tax structures. Aligns with international practices of targeted taxation on health-risk products. |
| Key Date | Lok Sabha passed both bills on December 3, 2025. |
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