When do the new tobacco and pan masala taxes start?

The new tax framework will become effective on February 1, 2026.

What is the new tax rate on products like cigarettes?

The tax is multi-layered. On top of the 40% GST rate, products will be subject to an Additional Excise Duty (for example, ranging from ₹2,500 to ₹11,000 per 1000 cigarette sticks) and a new Health & National Security Cess.

Why is the government calculating tax on the MRP now?

This policy aims to prevent tax evasion. By calculating tax directly on the printed Maximum Retail Price, sellers can no longer declare a lower transaction value to reduce their tax liability. The tax is now fixed to the price the final consumer pays.

What are 'sin goods'?

'Sin goods' are products considered harmful to health and society, such as tobacco and pan masala. Under the new GST structure implemented in September 2025, these goods, along with luxury items, were moved into the highest 40% tax slab.

Where will the money from the new Health and National Security (HSNS) Cess be used?

The revenue collected from the HSNS Cess will go directly into the central government's Consolidated Fund and will be used to finance public health initiatives and national security functions.

Ashish Singh, Author at Tally Solutions

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Ashish Kumar Singh has over 20 years of experience in the accounting field, with the last 10 years focused on developing Tally TDL and accounting automation tools. His goal is to make accounting easier for everyone by using technology to handle repetitive and time-consuming tasks. He founded Learnwell to help professionals automate their work and improve efficiency. Through his YouTube channel, he shares simple and practical TallyPrime tutorials, covering everything from the basics to advanced TDL coding, along with detailed insights into TallyPrime features. He enjoys exploring innovative ways to teach, using tools like AI and animations to make learning Tally engaging, clear, and easy to understand.