Overview
- A Gazette notification set February 1, 2026 as the date to end the GST compensation cess on tobacco and pan masala and to begin the replacement levies.
- Cigarettes will attract additional length‑based excise of ₹2,050–₹8,500 per 1,000 sticks on top of GST, which stays at 40% for most tobacco products and 18% for bidis.
- Pan masala will face a Health and National Security Cess based on self‑declared production capacity, with new capacity‑determination rules notified for chewing tobacco and gutkha packing machines.
- Parliament passed the enabling Health and National Security Cess and Central Excise amendment laws in December 2025, clearing the way for implementation.
- Shares of tobacco companies fell after the notification, with Godfrey Phillips down about 8–10% and ITC lower by roughly 4–6% to fresh lows, while a large block deal in ITC added to the pressure.