Finance Ministry Tables Bill To Hike Excise On Tobacco, Introduces New Cess On Pan Masala
On December 1, 2025, the finance minister Nirmala Sitharaman introduced the Central Excise (Amendment) Bill, 2025 and the Health Security and National Security Cess Bill, 2025, in the Lok Sabha, which will replace the existing Compensation Cess. The Central Excise (Amendment) Bill, 2025, seeks “to give the government the fiscal space to increase the rate of central excise duty...
On December 1, 2025, the finance minister Nirmala Sitharaman introduced the Central Excise (Amendment) Bill, 2025 and the Health Security and National Security Cess Bill, 2025, in the Lok Sabha, which will replace the existing Compensation Cess.
The Central Excise (Amendment) Bill, 2025, seeks “to give the government the fiscal space to increase the rate of central excise duty on tobacco and tobacco products so as to protect tax incidence”.
The Central Excise (Amendment) Bill, 2025, will replace the existing GST compensation cess, which is presently levied on all the tobacco products such as cigars, hookahs, cigarettes, zarda and scented tobacco.
The finance minister will also introduce the Health Security and National Security Cess Bill, 2025, which will levy a new cess on pan masala. The government will notify if the cess is to be extended to any other goods.
According to the Health Security and National Security Cess Bill, 2025, the cess is meant to “augment the resources for meeting Security expenditure on national security and for public health, and levy a cess for the said purposes on the machines installed or other processes undertaken by which specified goods are manufactured or produced and for matters connected therewith or incidental thereto.”