Central Excise (Amendment) Act, 2025 to Come into Force from 1 February 2026
The Ministry of Finance, Department of Revenue, has issued Notification No. 03/2025–Central Excise (N.T.), dated 31st December 2025, bringing the Central Excise (Amendment) Act, 2025 into effect. As per the notification issued under G.S.R. 951(E), the Central Government has appointed 1 February 2026 as the date on which the provisions of the said Amendment Act shall come into force. The notification has been issued in exercise of the powers conferred under sub-section (2) of section 1 of the Central Excise (Amendment) Act, 2025 (34 of 2025). This marks the formal commencement of the amended excise provisions.
Centre Notifies Chewing Tobacco, Jarda and Gutkha Under Section 3A Excise Levy
The Central Government has issued Notification No. 04/2025–Central Excise (N.T.) dated 31st December 2025, bringing specified tobacco products under the excise duty regime based on packing capacity. As per the notification, chewing tobacco, jarda scented tobacco and gutkha, when manufactured with the aid of packing machines and packed in pouches, will be treated as notified goods under Section 3A of the Central Excise Act, 1944. The notification clarifies that chewing tobacco includes filter khaini and defines packing machines comprehensively. The provisions will come into force from 1 February 2026.
CBIC Notifies New Capacity-Based Excise Rules for Chewing Tobacco, Gutkha and Jarda from February 2026
The Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 05/2025–Central Excise (N.T.), dated 31st December 2025, notifying the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026. The rules will come into force with effect from 1 February 2026.
The notification reintroduces a capacity-based levy system under section 3A of the Central Excise Act, 1944, for manufacturers of chewing tobacco, jarda scented tobacco and gutkha packed with the aid of packing machines. Under the new framework, excise duty will be determined based on the number of packing machines installed and their maximum rated production capacity, linked to the retail sale price (RSP) of pouches.
Manufacturers are required to file declarations in Form CE DEC-01, supported by a Chartered Engineer’s certificate certifying machine speed and capacity. The jurisdictional excise authorities will verify declarations and issue orders determining annual production capacity. Monthly duty payment timelines, provisions for abatement during machine non-operation, mandatory CCTV installation with 48-month data retention, and strict penalties for non-compliance have also been prescribed.
The move aims to strengthen revenue certainty, curb evasion, and ensure tighter regulatory oversight over the tobacco and gutkha manufacturing sector.
Government Revises Central Excise Notification to Specifically Include Gutkha
The Central Government has issued Notification No. 06/2025–Central Excise (N.T.), dated 31st December 2025, amending an earlier excise notification related to tobacco products. Issued by the Ministry of Finance (Department of Revenue), the amendment substitutes the words “Pan masala containing tobacco” with “Gutkha” in the relevant table under Serial No. 2, Column (3) of Notification No. 01/2022–Central Excise (N.T.), dated 1 February 2022. The change has been notified in the Gazette of India and will come into force from 1 February 2026. This amendment is intended to bring greater clarity and consistency in the excise treatment and regulation of Gutkha.
CBIC Notifies Revised Central Excise Duty Rates on Tobacco and Related Products
The Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 03/2025–Central Excise, dated 31st December 2025, revising the central excise duty structure on tobacco and tobacco-related products. The notification has been published in the Gazette of India (Extraordinary) and will come into force from 1 February 2026.
Issued under Section 5A(1) of the Central Excise Act, 1944, the notification supersedes Notification No. 3/2019–Central Excise, except for actions already undertaken under the earlier provisions. The revised rates aim to rationalize excise duties in the public interest and align taxation with product categories and consumption patterns.
Under the new framework, excise duty on unmanufactured tobacco (Heading 2401) has been set at 18%. Cigarettes attract duty based on length and type, with rates ranging from Rs. 2,050 to Rs. 8,500 per thousand, or ad valorem rates such as 21% or Rs. 4,170 per thousand, whichever is applicable. Tobacco substitutes, cigarillos, and other smoking products have also been assigned revised ad valorem or specific rates.
Further, products such as chewing tobacco, gutkha, jarda scented tobacco, snuff, and tobacco extracts have been subjected to higher excise duties, in some cases exceeding 80%, reflecting the government’s continued focus on public health concerns.
Taxpayers and manufacturers are advised to review the revised duty rates carefully and ensure compliance from the effective date.
CBIC Notifies Monthly Excise Duty Rates for Chewing Tobacco, Jarda and Gutkha Manufactured Using Packing Machines
The Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No. 04/2025–Central Excise, dated 31st December 2025, prescribing monthly excise duty rates per packing machine for specified tobacco products. The notification has been published in the Gazette of India (Extraordinary) and will come into effect from 1 February 2026.
Issued under sub-section (3) of Section 3A of the Central Excise Act, 1944, the notification applies to chewing tobacco (including filter khaini), jarda scented tobacco, and gutkha falling under tariff items 2403 99 10, 2403 99 30, and 2403 99 90 respectively. The levy is applicable where these notified goods are manufactured with the aid of packing machines and packed in pouches bearing a declared retail sale price (RSP).
The duty structure is based on two key parameters:
(i) Retail Sale Price (RSP) per pouch, and
(ii) Speed of the packing machine, measured in pouches per minute.
Different monthly duty slabs (in crore rupees per machine) have been specified for machines operating at speeds ranging from up to 500 pouches per minute to 1501 pouches per minute and above, with separate rates for chewing tobacco/jarda and gutkha. Where the RSP exceeds ₹2 per pouch, the duty is calculated as the higher of the fixed rate or the formula-based rate linked to RSP and machine speed.
The notification also clarifies definitions of packing machines, retail sale price, and treatment of multi-track machines, and aligns duty determination with the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026. Manufacturers are advised to review machine capacities and pricing carefully to ensure timely compliance.
The All Notifications can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/Central-Excise-Notifications-regarding-Tobacco.pdf
