Government Notifies Central Excise Act, 2025: Five Key Changes In Tax Structure For Tobacco Products
One of the highest duties in the amended schedule, at 325%, is imposed on smoking mixtures for pipes and cigarettes.
The recently passed Central Excise (Amendment) Act, 2025 was notified in the Gazette of India on Dec. 11. It focuses primarily on restructuring the duty rates on tobacco and tobacco-related products, earlier under the Fourth Schedule of the Central Excise Act,1944.
Earlier, a 28% Goods and Services Tax (GST) plus cess at a varied rate is levied on tobacco and related products.
This updated structure introduces revised excise duty rates for unmanufactured tobacco and tobacco refuse, cigars, cheroots, cigarillos, and cigarettes, manufactured tobacco, mixtures, and chewing products, and more. The key aim is to update tax structures in line with evolving products and public health concerns.
5 Highlights Of The New Duty Structure
Chewing Tobacco And Scented Tobacco At 100% Duty
According to the items under 2403-99-10, 2403-99-20 and 2403-99-30 of the amended act, chewing tobacco, preparations containing chewing tobacco, jarda, and related scented tobacco products will now carry a 100% duty.
Uniform 70% Duty On Most Unmanufactured Tobacco
As per the act, items under 2401-10 and 2401-20, which includes various sub-categories of tobacco, will now be taxed at a flat 70% excise duty. These include types of tobacco like Sun cured country (natu), Sun cured virginia, Burley, Flue cured virginia, and even tobacco for manufacture of biris, chewing tobacco, cigar and cheroot, and hookah tobacco.
High Duty On Premium Smoking Mixtures
One of the highest duties in the amended schedule, at 325%, is imposed on smoking mixtures for pipes and cigarettes under the 2403-19-10 section.
New Categories For Nicotine-Based Products
Under the entire 2404 section, new and detailed classifications have been introduced for nicotine-based products. Some, like ones containing tobacco or reconstituted tobacco are assigned 100% duty, whereas others, like products for oral or transdermal application are left blank, for future rate notifications. These include products for inflation without combustion, and even nicotine substitutes.
Cigarettes Categorised By Filter & Length
While the calculation of cigarette duty continues to be on the basis of 'per thousand sticks', the categorisation has changed to include the length of a cigarette, whether the filter is present, and the filter size.
Under the section 2402, duties on standard tobacco products will now from Rs 2,700 to Rs 11,000 per thousand sticks of cigarettes. Tobacco-substitute cigarettes and cigarillos will now attract Rs 5,000 per thousand sticks of cigarettes.
The excise duty levied on tobacco and its products through the Bill (now Act) will ensure that tax incidence on demerit items does not fall after the recent GST overhaul, Finance Minister Nirmala Sitharaman had said in the Lok Sabha, vowing to share revenues collected with states.
Quoting the World Health Organisation (WHO) observation that cigarette affordability has either stagnated or increased in the past decade in India, Sitharaman said that cess rates on cigarettes had remained unchanged since 2017, when GST was implemented.
