After the GST implementation in India, the finance ministry has removed an additional excise duty on tobacco, pan masala and cigarettes with effect from 1 July 2017. The revenue department also withdraws the central excise notification dated February 27, 2010, which deals with excise duty rate on unmanufactured tobacco and chewing tobacco.

The GST Constitutional (Amendment) Act permits the Centre to levy excise duty on six items including tobacco and tobacco products. The other items are petroleum crude, diesel, petrol, natural gas and ATF.

After the execution of Goods and Services Tax (GST) from July 1, the central excise notifications for tobacco, pan masala and cigarettes had to be brought in line with the new indirect tax regime. Under the GST, a cess is levied on demerit and luxury goods over and above the peak GST rate of 28%. The cess on pan masala has been decided at 60 per cent, while in tobacco the levy will vary from 71-204%.