India plans to introduce a new Health and National Security Cess to ensure tobacco products, including cigarettes, pan masala, and gutkha, continue to face high taxation after the GST compensation cess ends. A new bill and an amendment to the Central Excise Act will allow the government to impose this cess and increase duties so that the total tax burden on tobacco does not decline. The new levy is intended to support national security and public health expenditures. Under the revised GST framework, tobacco already falls under a special 40% rate, separate from the standard slabs.
Although the compensation cess was abolished for most goods, it had been retained for tobacco and was originally meant to end in 2022 before being extended to 2026 to clear pandemic-related revenue gaps. The upcoming cess ensures continuity in high taxation aimed at discouraging tobacco use. Sustained high…
