Central Excise Amendment Bill 2025 : Tobacco Tax Hike Explained
Understanding the Central Excise Amendment Bill 2025
Hey folks, if you’re scratching your head over the Central Excise Amendment Bill 2025 making headlines, you’re not alone. I was chatting with a friend who runs a small shop in Delhi last week. He sells cigarettes and pan masala. “Is this gonna jack up my prices?” he asked, looking worried. It turns out that tobacco taxes are the main factor. No big shake-up for most small businesses, but a real shift for sin goods. Let’s unpack it step by step.
Why This Bill Exists Right Now
The GST compensation cess, which was an additional tax on goods like tobacco to support states following the implementation of the GST, is about to expire. Loans get paid off by December, and poof, it’s gone. Without a fix, taxes on cigarettes and chewing tobacco would drop. The government doesn’t want that. In Parliament, Finance Minister Nirmala Sitharaman stated unequivocally that this is neither a new tax nor a covert acquisition. It’s excise duty coming back, just like before GST in 2017. The objective? Keep the total tax bite the same so revenue stays steady.
Consider it this way. GST, cess, and some excise are already applied to tobacco. Excise increases, cess disappears. States continue to receive a portion of the pot.
What Taxes Are Changing?
Numbers tell the story. The duty on unmanufactured tobacco increases from 64% to 70%. Cigarettes? enormous leap. Before, it was Rs 200 to 735 per thousand sticks. Now, Rs 2,700 to 11,000. Chewing tobacco shoots from 25% to 100%. Hookah tobacco from 25% to 40%. Mixes for smoking? 60% to 325%. Wild, right? These hit the Fourth Schedule of the Central Excise Act, 1944.
Pan masala gets its own bill – Health Security se National Security Cess Bill. New cess there too. Prices for smokes and gutkha might creep up a bit to match old levels. But Sitharaman stressed: no extra burden overall. When the news broke, tobacco stocks fluctuated, with ITC first declining and then rising.
Quick Path Through Parliament
Introduced in Lok Sabha on December 1, 2025. During the chaotic winter session on December 2 or 3, it was approved by voice vote. Despite complaints from the opposition, it passed. Now eyes on Rajya Sabha. Move quickly because the clock is running out.The
The GST rollout was a complete mess, with portals crashing, as I recall. This feels smoother so far. There were no reports of widespread panic.
Does It Hit Small Businesses or MSMEs?
Short answer: Nope. This targets tobacco makers and sellers, not your average MSME making soap or packaging. There are no new regulations for small unit breaks, manufacturers in general, or warehouses. That viral article claiming MSME relief? Total bunk. If you’re not in tobacco, breathe easy. Your GST headaches stay the same.
My shopkeeper pal sells other stuff too. “Good, one less worry,” he said with a grin. Sympathy to tobacco folks though – tighter margins ahead.
What Will Happen to You Next?
Watch prices at your corner paan shop. Government eyes health and revenue. Long term, it locks in steady cash for public spending without borrowing tricks. Stay tuned via Moneycontrol or Economic Times. Prep if tobacco’s your game – check compliance soon.
Bottom line: Smart fix, not a shock. Feels fair after the GST ride. What do you think – prices up or same? Drop a comment!
References
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Times of India
