On December 1st, the Sansad (the Parliament of India), introduced two tax bills that would significantly raise levies on tobacco products, as the national General Services Tax frameworks near expiration. The new measures are designed to preserve high tax incidence and prevent revenue losses once the current framework phases out.

What the Bills Would Do

The Central Excise Bill would impose new duties between 60-70 percent of product cost on tobacco products, including premium cigars, while establishing a fixed-rate tax on cigarettes. The companion bill would also create a tax structure on other designated sin goods in the country. Additionally both proposals expand registration and compliance requirements to all manufacturers.

Implications for Tobacco in India

For premium cigars and other tobacco products, the proposal represents a direct increase in the fiscal burdens for importers, producers, and consumers. More broadly, the measures reflect the policy direction encouraged by the World Health Organization’s Framework Convention on Tobacco Control, which India was an early signatory to, which promotes high taxes and broad population-level restrictions without differentiating among product categories. The new tax proposals signal India’s continued movement toward a more restrictive tobacco-control environment under Prime Minister Narendra Modi.

What Comes Next for the Proposals

The tax overhaul is part of a broader realignment of India’s current excise system. Parliamentary committees will now examine the bills, with a vote expected by the full Sansad sometime in 2026. CRA will continue to monitor this and other international news for potential impact to the industry and provide relevant updates as necessary.

To read more on the proposal, please click here.

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