Health and National Security Cess on Pan Masala, Higher Tobacco Taxes from Feb 1

In a move aimed at strengthening public health safeguards and discouraging the consumption of harmful products, the government has notified February 1 as the effective date for imposing higher taxes on tobacco products and pan masala.

Under the revised framework, additional excise duty on tobacco products and a new Health and National Security Cess on pan masala will come into force, over and above the applicable Goods and Services Tax (GST). These new levies will replace the existing compensation cess imposed on so-called “sin goods.”

From February 1, pan masala, cigarettes, tobacco and allied products will attract a GST rate of 40 per cent, while biris will continue to be taxed at 18 per cent GST. In addition, pan masala manufacturers will be subject to the newly introduced Health and National Security Cess, while tobacco products will face higher excise duties.

The legislative backing for the move was provided in December, when Parliament approved two Bills enabling the imposition of the Health and National Security Cess on pan masala manufacturing and enhanced excise duty on tobacco products, reinforcing the government’s stated commitment to preventive healthcare and disease control.

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