Overview
- The finance minister told the Lok Sabha the cess will not apply to essential goods and will be levied over and above the 40% GST rate on pan masala based on production capacity.
- A portion of collections will be shared with states for health schemes, a departure from typical cess practices where proceeds stay outside the divisible pool.
- The bill mandates registration and monthly self‑declarations, allows audits, inspection and search‑and‑seizure, sets heavy penalties, and permits prosecution for evasion above Rs 1 crore, with an appeals route up to High Courts.
- Rates are tied to machine pouch speed and weight, include a fixed levy for fully manual units, and can be temporarily doubled by the Centre in the public interest.
- Debate opened with opposition MPs seeking referral to a select committee and raising concerns over state revenues and earmarking, as Parliament separately cleared higher tobacco excise with revenues shared with states and the GST compensation cess winds down by March 2026.