New Delhi. Additional excise duty on tobacco products and health cess on pan masala will be applicable from February 01. The new taxes on tobacco and pan masala will be in addition to the Goods and Services Tax (GST). This replaced the compensation cess that is currently being imposed on such “harmful products”.

According to the government notification, from February 1, 2026, pan masala, cigarettes, tobacco and similar products will attract GST at the rate of 40 percent, while ‘beedis’ will attract 18 percent GST. Additionally, health and national security cess will be levied on pan masala while tobacco and products will attract additional excise duty.

The Finance Ministry notified the Chewing Tobacco, Zarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Fee) Rules, 2026 late on Wednesday night. It is noteworthy that Parliament had approved two bills in December, which allow imposition of new health and national security cess on making pan masala and excise duty on tobacco.

The Central Government has issued a notification that these fees will be applicable from February 1. According to this notification, the existing GST Compensation Cess, which is levied at different rates, will be abolished from February 1.