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Finance Minister Nirmala Sitharaman will introduce two new bills in the winter session of Parliament to tax unhealthy products like cigarettes, gutkha, and pan masala. The Central Excise (Amendment) Bill, 2025, will replace the GST compensation cess currently levied on all tobacco products, including cigarettes, chewing tobacco, cigars, hookahs, zarda, and scented tobacco. The Health Safety and National Security Cess Bill, 2025, provides for the imposition of a cess on the production of specific items, such as pan masala.

The Health Safety and National Security Cess Bill, 2025, will now levy cess based on machine capacity, machine frequency, and other production-related factors. This bill will significantly change the GST rate. The GST on tobacco products will increase from the previous 28% plus compensation cess to 40% plus compensation cess. Currently, the compensation cess ranges from 5% to 290%, depending on the product. However, the tax consumers pay will remain unchanged despite the GST rate increase.

For example, a certain type of cigarette currently attracts a 28% GST plus a 290% compensation cess, totaling a tax of 318%. After the change, the GST will remain at 40%, but the compensation cess will be reduced to 278%. Thus, consumers will only have to pay a 318% tax on those cigarettes. After the bill is passed by Parliament and signed by the President, the government will notify the rules.

SP-CPI(M) Warns of Disrupting Parliament on SIR
Samajwadi Party MP Ram Gopal Yadav and CPI(M) MP from West Bengal John Brittas threatened to disrupt Parliament if the SIR is not discussed. The winter session of Parliament begins on Monday. Ram Gopal Yadav said that if the government is not willing to discuss the SIR, they will not allow Parliament to function. John Brittas, meanwhile, said that the government should accept the demand for a discussion on the SIR, even if it is in the name of electoral reforms.

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