The Central Excise (Amendment) Bill, 2025

Parliament has approved the Central Excise (Amendment) Bill 2025, empowering the Centre to levy higher excise duty on tobacco and related products.

About the Bill

• The Bill aims to amend the Central Excise Act, 1944, which governs the levy and collection of central excise duties on goods manufactured or produced within India.
  • It seeks to update the tariff rates for tobacco products in Section IV of the Fourth Schedule to the Central Excise Act, 1944.
• Excise Framework Post-GST: After the introduction of the Goods and Services Tax (GST) in 2017, central excise duties were removed from most items except a few, such as tobacco and tobacco products.
• Objective of the Amendment: The Bill seeks to impose a higher central excise duty on tobacco and related products after the Compensation Cess is withdrawn, ensuring that overall tax incidence does not decline, preventing increased affordability.

Key Provisions of the Bill

• Higher Excise Duty: The Bill proposes substantial increases in central excise duty on unmanufactured tobacco, manufactured tobacco, tobacco products, and tobacco substitutes.
• Continued GST Classification: Tobacco products will remain in the 40% GST demerit category, but GST alone cannot ensure high tax incidence without compensation cess.
• Part of Divisible Pool: Since excise duty is part of the divisible pool, States will receive their share automatically.
• The Excise Duty rates proposed includes:
  • The excise duty on unmanufactured tobacco, including sun-cured tobacco leaves, will rise from 64% to 70%.
  • The duty on chewing tobacco will increase significantly from 25% to 100%.
  • The excise duty on hookah or gudaku tobacco will rise from 25% to 40%.
  • The duty on smoking mixtures used in pipes and cigarettes will be raised sharply from 60% to 325%.
  • The duty on cigarettes, will increase substantially to ₹2,700–₹11,000 per 1,000 cigarettes (which ranges between ₹200 and ₹735 per 1,000 cigarettes)

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