Tobacco products – GST and Central Excise regimes set for overhaul

From 1 February 2026, the GST and Central Excise framework for tobacco products is set for a major change. While the tax/duty rates on most tobacco products will change significantly, valuation process will also change, impacting both manufacturers and traders alike.

Key highlights of the changes:

• GST regime:
• GST rate on specified tobacco products revised to 40%, Biris to attract GST at 18%.
• Valuation to be based on retail sale price under new Rule 31D.
• Central Excise regime:
• Implementation of Central Excise (Amendment) Act, 2025.
• Duty on chewing tobacco, jarda scented tobacco, and gutkha based on packing machine capacity under Section 3A.
• Unmanufactured tobacco which was hitherto exempt from central excise will become dutiable from 1 February 2026 and be subject to all compliance regulations for all dealing with tobacco from the stage of cultivation and further processing down the chain.    
• Significant increase in excise duty rates for cigarettes, hukkah tobacco, gutkha, and other products.

Join us for an in-depth discussion on the sweeping changes in the taxation of tobacco products under these laws.

The webinar will cover:

• Detailed analysis of GST rate changes and valuation mechanism.
• Compliance requirements under amended GST Rules, and Central Excise provisions.
• Central Excise changes and capacity-based duty implications.
• Notifications and rules issued for implementation.
• Practical impact on manufacturers and traders including exporters.
  
  SPEAKERS:
  
  Ravi Raghavan, Senior Partner, LKS
  Bipin Verma, Senior Partner, LKS