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After income tax slab changes in Budget 2025, Modi government eyes GST revampCurrently, a 5% compensation cess applies to products like cigars and cigarettes, with additional specific levies ranging from 2,076 to 4,170 per thousand units, based on their characteristics such as length, filter presence and flavouring.A group of ministers (GoM) focusing on tobacco taxation was established under former Odisha finance minister Niranjan Pujari's leadership through the GST Council.The GoM recommended modifying the GST cess component, suggesting it should correlate with a product's maximum retail price instead of its sales value.This matter was subsequently directed to a fitment committee and the GoM responsible for rate rationalisation.Additionally, the council requested the GoM on compensation cess to evaluate tobacco taxation considering two possibilities: incorporating the cess into the existing slab or implementing an alternative cess system.
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