In a major move aimed at strengthening public health policies and boosting government revenue, the Parliament of India has passed the Central Excise (Amendment) Bill, 2025. The Rajya Sabha approved the legislation and returned it to the Lok Sabha, marking a landmark decision in the country’s efforts to discourage tobacco use and address its harmful health impacts. The Bill amends relevant provisions of the Central Excise Act, 1944, granting the government broader fiscal authority to enhance excise duties and cess on tobacco and related products. These include cigarettes, cigars, hookah tobacco, chewing tobacco, zarda, smoking mixtures, and other manufactured tobacco substitutes.
Higher Duties Introduced on a Range of Tobacco Products
One of the most significant aspects of the Bill is the steep increase in central excise duty, specifically targeted toward discouraging consumption patterns. Key changes include:
- Duty on chewing tobacco raised from 25 percent to 100 percent
- Excise on hookah tobacco increased from 25 percent to 40 percent
- Duty on smoking mixtures for pipes and cigarettes set to increase from 60 percent to 325 percent
In addition to percentage-based hikes, the revised Act now mandates a substantial increase in duty per thousand cigarettes. Under the earlier law, excise duty ranged between ₹200 and ₹735 per thousand cigarettes. The new law increases this range to ₹2,700 and ₹11,000 per thousand cigarettes, depending on product category and length.
The focus of these hikes, according to officials, is to ensure tobacco becomes less affordable, particularly to young users and first-time consumers.
Aim: Protect Citizens and Promote Healthier Choices
The Union government has emphasized that the move is not merely revenue-driven but part of a larger anti-tobacco framework. Health experts have long argued that increasing taxation is among the most effective tools to reduce smoking and tobacco dependency.
Presenting the Bill in Parliament, Minister of State for Finance Pankaj Chaudhary stated that the amendment provides crucial fiscal space for adjusting tax impacts when existing cess structures end. He said the measure ensures that the burden of harmful consumption does not fall on public finances and healthcare infrastructure.
States to Benefit from Enhanced Revenue Distribution
Finance Minister Nirmala Sitharaman, responding to a detailed debate in Rajya Sabha, clarified that the increased excise duties are not another cess, but part of the existing tax structure. As a result, revenue will be shared with the states according to recommendations of the Finance Commission.
This ensures that states many of which shoulder the burden of tobacco-related diseases receive a strengthened financial share that can support healthcare initiatives and awareness programs.
Safeguarding Farmers and Beedi Workers
The Finance Minister also addressed concerns raised by MPs over the Bill’s possible impact on tobacco cultivators and beedi industry workers. She assured that the government is committed to protecting their livelihoods through multiple welfare and transition initiatives.
She highlighted several crop diversification schemes, aimed at encouraging farmers to gradually switch to alternative cash crops without financial distress. These schemes are designed to reduce long-term dependence on tobacco as an agricultural commodity while building more sustainable income sources.
A Step Toward India’s Tobacco Control Goals
India has one of the world’s largest tobacco-consuming populations, contributing significantly to cancer cases and lifestyle diseases. Public health advocates have welcomed the government’s decision, noting that the increased taxation structure places India closer to global best practices recommended by the World Health Organization’s Framework Convention on Tobacco Control (WHO-FCTC).
Economists also believe that higher excise duties can contribute to stronger state revenue pools, particularly at a time when governments face rising healthcare expenditures.
The passing of the Central Excise (Amendment) Bill, 2025 reflects a strong political commitment toward public health, fiscal responsibility, and economic justice. By significantly increasing tobacco duties and companion revenues, the government seeks to strike a balance between discouraging harmful habits and supporting affected workers and farmers in shifting toward safer livelihoods.
As the new tax structure comes into effect, its real-world impact will become clearer in the months ahead, but policymakers and health experts agree: this is a decisive step toward a healthier India.
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