NEW DELHI, Dec. 1 -- The Centre on Monday moved to overhaul the taxation of tobacco and related products, including cigarettes, snuff, smoking mixtures, and pan masala, by phasing out the goods and services tax (GST) compensation cess and raising excise duties. Finance Minister Nirmala Sitharaman tabled two Bills in the Lok Sabha aimed at keeping overall tax incidence steady while ensuring states benefit from excise revenues.

Tobacco products are subject to both GST and central excise duty. To preserve the overall tax burden after discontinuing the compensation cess, the government has proposed amending the Central Excise Act and introducing a new cess in its place.

The Central Excise (Amendment) Bill, 2025, proposes raising excise duty...