LS passes pan masala cess bill:Find out how much tax will you pay on gutka, and other similar products as production costs set to rise

The Lok Sabha on Friday, 5 December 2025, passed the Bill to levy a higher cess on pan masala manufacturing units. Union Finance Minister Nirmala Sitharaman had tabled two Bills during the ongoing winter session of the Parliament to revise levies on tobacco and pan masala. Following this development, the public has been curious whether cigarettes and and pan masala would become costlier. 2 Bills on Tobacco and Pan Masala Cess Tabled in Parliament The government aims to revise tobacco and pan masala levies through these Bills. For Cigarettes, the Central Excise Act, 1944, will be amended by Central Excise (Amendment) Bill to levy additional Cess. For PAN Masala and Gutka, the Lok Sabha has now passed the ‘Health Security se National Security Cess Bill’. Types of taxes levied on tobacco products? The government levies three types of taxes on tobacco products: How much GST is levied currently? The central government currently levies 28% GST on sin and luxury goods, and plans to increase it to 40%. How is the levy determined? The duty imposed on cigarettes depends on the size of the stick, type of the tobacco product, etc. For example, a 65-mm-long cigarette attracts duties of ₹200 on every 1,000 sticks. However, the new ‘Central Excise (Amendment) Bill, 2025’ would hike this to ₹2,700 per 1,000 sticks. Likewise, cigarettes with over 65 mm in length but less than 70 mm, currently attract ₹250 per 1,000 sticks. Under the new law, it will increase to ₹4,500 per 1,000 sticks.
When will the new rates be applicable? According to the copy of the ‘THE CENTRAL EXCISE (AMENDMENT) BILL, 2025’ the new rates may ‘come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.’ Will the new cess increase cigarette prices ? According to CA, Deep Koradia, prices of cigarettes and other tobacco products will not increase much even after the excise amendment bill becomes a law.
According to the tax expert, the tobacco rates will go up once the new GST rate of flat 40% including Cess will be notified. ​