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Lok Sabha clears Bill to sharply raise excise duty on tobacco products

04-Dec-25 11:39 Hrs IST

The Lok Sabha has passed the Central Excise (Amendment) Bill, 2025, which allows the government to raise excise duty and cess on a wide range of tobacco products. Finance Minister Nirmala Sitharaman said the change is not a new tax but a shift from compensation cess back to excise duty, which existed before GST. She added that higher taxes have long been used as a deterrent to reduce tobacco use. The minister highlighted steady gains in public health spending and noted ongoing efforts to help farmers shift away from tobacco cultivation.

Members across parties flagged the heavy health and economic cost of tobacco. Some MPs, however, expressed concerns about the impact on growers and workers. The Bill significantly increases duty rates, with taxes on cigarettes rising to between Rs 2,700 and Rs 11,000 per thousand sticks. The Bill also prescribes higher excise duties for manufactured tobacco products. For instance, the duty on chewing tobacco will increase from 25% to 100%. Duty on hookah will increase from 25% to 40%. For smoking mixtures for pipes and cigarettes, the duty is proposed to be increased from 60% to 325%. Supporters said the move will help curb consumption, while critics called for a wider plan to protect those dependent on the tobacco sector.

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