Overview
- The Finance Ministry’s Gazette notifications set February 1, 2026 as the start date for the new levies and for ending the GST compensation cess on tobacco-linked goods.
- From that date, pan masala, cigarettes, tobacco and similar products will carry 40% GST, while biris will be taxed at 18%.
- A Health and National Security Cess will be imposed on pan masala, and tobacco products will attract additional excise duty over and above GST.
- The Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026 have been notified to assess production capacity and collect duty from manufacturers.
- Parliament approved the enabling Health and National Security Cess law and a Central Excise amendment in December, following the GST Council’s plan to phase out the compensation cess tied to pandemic-era state loan obligations.