SRINAGAR: Parliament on Thursday passed the Central Excise (Amendment) Bill, 2025, with the Rajya Sabha approving and returning it to the Lok Sabha. The legislation seeks to amend the Central Excise Act, 1944, raising excise duties and cess on tobacco products including cigarettes, cigars, hookah tobacco, chewing tobacco, zarda, and scented tobacco.
The Bill aims to provide the government with fiscal space to increase central excise duty rates on tobacco and tobacco products, protecting tax incidence after the cessation of the tobacco cess. Minister of State for Finance Pankaj Chaudhary moved the Bill in Parliament.
Under the proposed amendments, excise duty on unmanufactured and manufactured tobacco, tobacco products, and tobacco substitutes will increase substantially. For instance, duty on chewing tobacco will rise from 25 percent to 100 percent, hookah tobacco from 25 percent to 40 percent, and smoking mixtures for pipes and cigarettes from 60 percent to 325 percent. The duty on cigarettes per thousand sticks will increase from a range of 200–735 rupees to 2,700–11,000 rupees. The move is aimed at discouraging tobacco consumption and protecting public health.
Replying in Rajya Sabha, Finance Minister Nirmala Sitharaman clarified that the higher duties are excise duties, not cess, and revenue will be shared with states as per Finance Commission recommendations. She assured that tobacco farmers and 49.82 lakh registered beedi workers will not be adversely affected, citing crop diversification schemes and labour welfare initiatives already in place. She also noted that India’s total tax incidence on cigarettes is around 53 percent of retail price, below the WHO benchmark of 75 percent.
Opposition members raised concerns over the Bill’s impact on farmers and questioned its efficacy in reducing tobacco consumption. Congress MP Pramod Tiwari urged referral to a parliamentary committee, while TMC’s Sagarika Ghose called for stronger public health measures to curb tobacco use. AAP’s Sandeep Kumar Pathak criticised excessive taxation as a deterrent, whereas AIADMK’s M Thambidurai described the Bill as a timely measure for public health and revenue stability.
