The Union Government today on December 01, 2025, introduced the “Central Excise (Amendment) Bill, 2025” in Lok Sabha to revise tariff rates of tobacco and manufactured tobacco products under Section IV of the Fourth Schedule of the Central Excise Act, 1944. The Bill has been introduced by Smt. Nirmala Sitharaman, Minister of Finance and Corporate Affairs.
Purpose of the Amendment
With the introduction of GST in 2017, excise duties on tobacco products were significantly reduced to accommodate the levy of GST and Compensation Cess. As the Compensation Cess will be discontinued once pending loan liabilities and interest obligations are discharged, the revised excise duty structure will provide the Government necessary fiscal space to protect the overall tax incidence on tobacco products.
Key Provisions
The Bill seeks to substitute the existing tariff table relating to tobacco and tobacco products in the Fourth Schedule of the Central Excise Act, 1944.
Major changes include:
Increase in Central Excise Duty Rates
| Product Category | Earlier Rate | Proposed Rate |
| Unmanufactured tobacco | 64% | 70% |
| Cigars and cheroots | 12.5% / ₹4006 per thousand | 25% / ₹5000 per thousand (whichever higher) |
| Filter cigarettes (various lengths) | ₹200–₹545 per thousand | ₹2700–₹7000 per thousand |
| Smoking mixtures | 60% | 325% |
| Chewing tobacco | 25% | 100% |
| Snuff | 25% | 70% |
| Tobacco extracts and essence | 25% | 70% |
The revised rates apply across tariff headings 2401 to 2404, covering tobacco leaves, cigarettes, cigars, hookah tobacco, chewing tobacco, cut tobacco, snuff, and nicotine-containing products intended for inhalation without combustion.
Financial Impact
The Bill does not involve any expenditure from the Consolidated Fund of India.
Benefits Expected
- Ensures stable tax revenue from tobacco products
- Maintains continuity in taxation after discontinuation of Compensation Cess
- Helps in discouraging tobacco consumption by tightening duty regime
Next Steps
The Bill will come into force on a date to be notified by the Central Government in the Official Gazette after passage in Parliament.
The Bill can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2025/12/THE-CENTRAL-EXCISE-AMENDMENT-BILL-2025.pdf
