- Shares of ITC, Godfrey Phillips, and VST Industries rose after tax clarity on beedis
- Finance Minister Sitharaman confirmed no increase in beedi taxation in Parliament
- GST on beedis cut from 28% to 18%, excise duty adjusted to balance tax incidence
Shares of ITC, Godfrey Phillips India, and VST Industries are in focus on Thursday after Finance Minister Nirmala Sitharaman clarified in Parliament that beedis will not face any increase in their current level of taxation. She said the government has simply adjusted the GST and excise structure, ensuring no additional burden on the sector.
“There is no change in the tax incidence on beedi. Not even a single paisa of tax has been increased,” Sitharaman told lawmakers in the Lok Sabha.
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During the discussion on the Central Excise (Amendment) Bill 2025, the minister explained that the GST rate on beedis was reduced from 28% to 18% in September, and the new excise levy will bridge that gap. Earlier, the GST system included a compensation cess on demerit goods, which is now being phased out.
Under the proposed excise framework, unmanufactured tobacco will attract an excise duty of 60–70%.
Sitharaman's remarks came in response to MPs who warned that higher taxes could threaten the livelihoods of beedi workers. She outlined the various government schemes designed to support them, including healthcare facilities, housing subsidies, and educational scholarships.
The government provides healthcare support through 10 hospitals and 279 dispensaries nationwide, along with reimbursement for specialised treatments such as cancer, tuberculosis, heart diseases, and kidney transplants.
Children of beedi workers receive financial assistance ranging from Rs 1,000 to Rs 25,000 per year, from Class I through university, depending on the level of study. Additionally, a Rs 1.50 lakh subsidy per beneficiary is provided for constructing pucca houses under the Pradhan Mantri Awas Yojana.
The Lok Sabha on Wednesday passed the Central Excise (Amendment) Bill 2025 by voice vote, enabling the government to impose higher excise duty on tobacco and related products once the GST compensation cess ends.
Introduced on Monday, the bill amends the Central Excise Act, 1944, allowing tax rate adjustments as the compensation cess is discontinued after its liabilities are settled.
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