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Informist, Monday, Dec. 1, 2025

 

--Sitharaman introduces Central Excise (Amendment) Bill, 2025 in Lok Sabha 
--Sitharaman introduces Health Security se National Security Cess Bill 
 

NEW DELHI – Finance Minister Nirmala Sitharaman on Monday introduced The Health Security Se National Security Cess Bill, 2025, and The Central Excise (Amendment) Bill, 2025, to impose an additional levy on tobacco products including cigarettes, pan masala and gutkha. The additional levy on these items will replace the compensation cess under the goods and services tax regime.

 

The Health Security Se National Security Cess Bill seeks to introduce a new cess on pan masala, and the amendment to the Central Excise Act will allow hiking duty on tobacco products like cigarettes.

 

The GST compensation cess was introduced to bring states on board to adopt the GST regime in 2017. The Centre had promised to protect 14% revenue growth for states for the first five years by levying a compensation cess on certain luxury goods, including motor vehicles, expensive motorcycles, caffeinated beverages, and sin goods such as tobacco items and pan masala. Initially set to expire in June 2022, the cess was extended until March 2026 to repay INR 2.69 trillion in loans taken by the Centre to partly bridge the revenue shortfall of states during the COVID-19 pandemic.

 

On Sept. 3, the GST Council overhauled the indirect tax structure by slashing rates on a host of common and daily-use items. The council also introduced a new GST rate of 40% on luxury goods to subsume the GST compensation cess that some of the items in the 28% GST bracket attracted. However, the council decided to continue with the compensation cess on tobacco-related products till the GST-related loans were repaid. The government had said that the overall tax incidence on such sin items would not be allowed to come down in post-compensation cess era.  End

 

Reported by Sagar Sen

Edited by Vandana Hingorani

 

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