By Anamati Inyang
January 1, 2026
The federal government has announced that additional excise duty on tobacco products and a health cess on pan masala will come into effect from February 1, 2026.
According to officials, these new levies will be applied on top of the existing Goods and Services Tax (GST)
rates and will replace the compensation cess currently charged on these products, commonly referred to as “sin goods.”
The move is aimed at strengthening public health measures while maintaining revenue collection from products considered harmful.
Government sources indicated that the additional excise duty and health cess are part of broader fiscal reforms intended to align taxation with health objectives.
Tobacco companies and pan masala manufacturers are expected to factor the new charges into pricing structures ahead of the February deadline. Experts suggest that consumers are likely to experience a modest increase in retail prices as a result.
While the exact rates of the new excise duty and health cess have not been officially disclosed, authorities say detailed guidelines will be shared with relevant stakeholders in the coming weeks.
This adjustment marks a significant step in the government’s ongoing efforts to curb the consumption of products linked to health risks, while ensuring fiscal measures keep pace with evolving public health priorities.
