Government Announces Nil Compensation Cess Rate Across Various Tobacco Products From Feb 1
The Ministry of Finance (Department of Revenue) has recently issued a Notification No. 03/2025-Compensation Cess (Rate) Dated 31st December, 2025, notifying the reduction of GST Compensation Cess to “Nil” for some specified Pan Masala and Tobacco Products. The amendment was issued on December 31, 2025, and will come into effect on February 1, 2026.
As per the notification, the changes are based on the recommendations of the GST Council and the decision is taken in exercise of the powers given under subsection (2) of section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 (15 of 2017).
The government has replaced the current cess rate with “Nil” for many ranges of serial numbers in the schedule covering certain entries between S. No. 1 and S. No. 38, including their respective sub-entries, such as 1A, 5A, 6A, 7A, 19A, 20A, 24A, 24B, 24C, etc.
Refer to the Official Notification for More Information.
