Parliament Winter Session: Govt to bring two bills in Lok Sabha to replace GST cess on tobacco, pan masala with new levies
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Prelims + Mains·
Why in news
The Government is introducing two bills in the Lok Sabha to replace the GST compensation Cess on tobacco and pan masala with excise duty and a new Health Security and National Security Cess.
Background
The Central Excise Amendment Bill, 2025, aims to maintain tax incidence on tobacco products after the GST compensation Cess ends. The Health Security and National Security Cess Bill, 2025, proposes a new cess specifically on the manufacturing of pan masala.
Facts for Prelims
- Act / BillCentral Excise Amendment Bill, 2025: proposed to replace GST compensation Cess on tobacco products.
- Act / BillHealth Security and National Security Cess Bill, 2025: proposed to levy a cess on pan masala manufacturing.
- FactThe bills aim to maintain tax incidence on 'sin goods' following the cessation of the GST compensation Cess.
For Mains
Q. Discuss the fiscal implications and public health objectives of shifting tax structures from GST compensation Cess to specific excise duties on 'sin goods' in India.
Dimensions to cover in your answer
- Fiscal neutrality: Ensuring consistent tax incidence on tobacco products post-compensation Cess
- Public health objective: Using targeted levies to discourage consumption of tobacco and pan masala
- Regulatory shift: Transitioning from indirect tax compensation models to direct excise-based levies
Keywords: Fiscal Policy · Sin Tax · GST Compensation Cess · Excise Duty · Tax Incidence
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