Lok Sabha passes Bill to levy excise duty on tobacco
GST
Dated:- 3-12-2025
PTI
New Delhi, Dec 3 (PTI) Lok Sabha on Wednesday passed a law to levy a higher excise duty on tobacco and related products once the GST compensation cess ends.
The Central Excise (Amendment) Bill, 2025, was passed by a voice vote in the lower house.
The Bill, once enacted, will give the government the fiscal space to increase the rate of central excise duty on tobacco and related products after GST compensation cess, which is currently levied on all tobacco products like cigarettes, chewing tobacco, cigars, hookah, zarda, and scented tobacco, ceases to exist.
Currently, a 28 per cent Goods and Services Tax (GST) plus cess at a varied rate is levied
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without a large impact on their tax incidence.
Compensation cess levied on tobacco and tobacco products will be discontinued once interest payment obligations and loan liabilities under the compensation cess account are completely discharged. ” Finance Minister Nirmala Sitharaman said in the Lok Sabha: “In another, probably, couple of weeks the loans will be completely repaid. The Centre, therefore, wants to make sure that the excise will come back to us so that we can levy the duty”.
At the time of the introduction of the GST on July 1, 2017, a compensation cess mechanism was put in place for five years till June 30, 2022, to make up for the revenue loss suffered by states on account of GST implementation.
The levy of compensation
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