'No Tax Increase On Beedis': FM Sitharaman On GST Cut, Excise Adjustment
Sitharaman was responding to concerns from MPs who said higher taxation will disrupt the livelihoods of beedi workers.
Finance Minister Nirmala Sitharaman on Wednesday said beedis will not see any increase in current level of taxation as the government has made adjustment in the GST and excise structure.
"There is no change in the tax incidence on beedi. Not even a single paisa of tax has been increased," she told lawmakers in the Lok Sabha.
During a discussion of the Central Excise (Amendment) Bill 2025, the minister clarified that GST rate on beedis was reduced from 28% to 18% in September and new excise levy will bridge that gap. The GST system earlier had a compensation cess component on demerit goods, that will be phased out.
Under the proposed excise regime, unmanufactured tobacco would face an excise duty of 60-70%.
Sitharaman was responding to concerns from MPs who said higher taxation will disrupt the livelihoods of beedi workers. She went on to highlight the various schemes and programmes the government has to help beedi workers, such as health facilities, housing subsidies, and scholarships for studies.
Healthcare facilities are provided through 10 hospitals and 279 dispensaries across India. A reimbursement is available for specialised treatments such as cancer, tuberculosis, heart diseases, and kidney transplantation.
A financial assistance is provided for the education of children of beedi workers from Class I to college/university, ranging from Rs 1,000 to Rs 25,000 per student per annum depending on the class/course.
Moreover, a subsidy of Rs 1.50 lakh per beneficiary is provided for the construction of pucca houses under the Pradhan Mantri Awas Yojana.
The Lok Sabha passed the Central Excise (Amendment) Bill 2025 by a voice vote on Wednesday that will allow the government to levy a higher excise duty on tobacco and related products once the GST compensation cess ends.
The bill, introduced on Monday, amends the Central Excise Act, 1944, to adjust tax rates while discontinuing the compensation cess once its liabilities are settled.
The Central Excise (Amendment) Bill, 2025, will replace the existing GST compensation cess on cigarettes, chewing tobacco, cigars, hookah, zarda and scented tobacco with a revised excise structure.
The levy of excise on tobacco will ensure that incidence of tax on the demerit good remains same even after the expiry of the GST compensation cess, according to Sitharaman.
