GST Reform: Pan Masala, Cigarettes, Tobacco to Be Taxed on Retail Sale Price

The GST Council has decided that the Pan Masala, Gutkha, Cigarettes, Chewing Tobacco (like Zarda), and Unmanufactured Tobacco will now be taxed on their Retail Sale Price (RSP) and not on the transaction value. This decision aims to bring more clarity and ease compliance.

For all goods (other than pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi), the changes in GST rates will take effect from September 22, 2025. For these Tobacco-related products, the current GST rate and compensation cess rates will continue until the loan and interest payment under the compensation cess amount are fully cleared.

Additionally, the Council has also decided to give an IGST and compensation cess exemption for a new armoured sedan car being imported by the President’s Secretariat for the President of India.