Central Excise (Amendment) Bill 2025: Higher Duties Proposed on Cigarettes, Tobacco & Nicotine Product [Read Bill]

Central Excise (Amendment) Bill 2025: Higher Duties Proposed on Cigarettes, Tobacco & Nicotine Product

The Central Government has introduced the Central Excise (Amendment) Bill, 2025 in the Lok Sabha to revise the excise duty structure on tobacco and tobacco-related products. The Bill seeks to amend the Central Excise Act, 1944, one of India’s oldest tax laws, and brings in a completely updated schedule of excise duty rates on items such as cigarettes, cigars, chewing tobacco, jarda, snuff and modern nicotine-based products.

What does the Bill change?

The Bill primarily amends Section IV of the Fourth Schedule of the Central Excise Act. This section lists all tobacco and nicotine products, along with the applicable excise duty.

The amendment replaces the entire existing table of duty rates with a new and much higher rate structure.

Key changes

1. Raw tobacco and unmanufactured tobacco

• Previous duty: around 64 % for most categories.
• New duty: 70 %.
• Tobacco waste goes from 50 % to 60 %.

2. Cigars and cigarillos

• Old duty: 12.5 % or Rs. 4006 per thousand units, whichever was higher.
• New duty: 25 % or Rs. 5000 per thousand units, whichever is higher.

3. Cigarettes (major changes)

This is where the largest increases appear. Earlier, the duty on cigarettes was relatively low in terms of specific rupee amounts. The new rates are sharply higher.

Examples:

Cigarette Type	Earlier Duty	New Duty
Non-filter up to 65 mm	Rs. 200 per 1000	Rs. 2700 per 1000
Non-filter 65–70 mm	Rs. 250 per 1000	Rs. 4500 per 1000
Filter up to 65 mm	Rs. 440 per 1000	Rs. 3000 per 1000
Filter 70–75 mm	Rs. 545 per 1000	Rs. 7000 per 1000
Other cigarettes	Rs. 1680 per 1000	Rs. 11000 per 1000

4. Cigarettes made from tobacco substitutes

• From Rs. 600 per thousand to Rs. 5000 per thousand.

5. Smoking mixtures (used in pipes and hand-rolled cigarettes)

• From 60 % to 325 %.

This is one of the steepest increases in the schedule.

6. Biris (hand rolled)

Biris previously attracted very low excise duty.

• Old rates:
• Re. 1 per 1000 for handmade biris
• Rs. 2 per 1000 for others
• New rate: 10 % ad valorem for both categories

7. Chewing tobacco, jarda, snuff and similar products

Most categories now attract 70% to 125% excise duty.

Examples:

• Chewing tobacco and preparations: 100%
• Jarda scented: 100%
• Snuff: 70%
• Extracts and essences: 70%
• “Other” items: 125%

8. Newer nicotine products

These include products used for inhalation without burning and products meant for oral intake that contain nicotine.

• Old: 81 % duty
• New: 100 % duty
• Some new categories added for future taxation

How will this affect businesses and consumers?

For consumers: Prices of almost all tobacco products are expected to rise. Cigarettes may see the highest jump because the new excise duties increase specific (per unit) taxation sharply.

For the tobacco industry: Manufacturers of cigarettes, chewing tobacco and specialty smoking mixtures will face higher taxation. Some low-cost products like biris may also become more expensive compared to earlier.

For government revenue: Although the Bill does not estimate the revenue impact, the revised duties are likely to increase collections from the tobacco sector.

For public health: Higher taxes are considered an effective way to reduce tobacco consumption. The Government’s approach aligns with global public health recommendations that suggest steep taxes to discourage usage.

When will the changes take effect?

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The Bill states that it will come into force on a date notified by the Central Government. This means the rates will not apply until the Government issues a separate notification in the Official Gazette