List of Items Likely to Get Costlier From February 1 Due to New Tax and Cess

A new tax framework notified by the government will come into force from February 1, leading to higher prices for select products. The changes involve the withdrawal of the GST compensation cess and the introduction of additional excise duty and new cess levies on specific categories.

Cigarettes

Cigarettes will see a higher tax burden as a specific excise duty is introduced alongside the existing GST. The duty will vary based on cigarette length and replaces the compensation cess that was in place until now. The combined tax incidence is expected to push up retail prices.

Beedis

Beedis will also be affected by the revised tax structure. While GST continues to apply, the introduction of additional duty is likely to increase overall taxation on these products, making them costlier for consumers.

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Pan Masala

Pan masala and similar products will attract a new health and national security cess, in addition to GST. The cess applies across various price points and is expected to raise consumer prices once implemented.

Chewing Tobacco and Other Tobacco Products

Products such as gutkha, jarda, khaini, and other forms of chewing tobacco will fall under the new excise duty and cess framework. The higher levy is expected to be passed on to consumers.

Why are prices set to rise?

The government has replaced the earlier compensation cess regime with a structured excise duty and cess system from February 1. This results in a higher tax outgo for manufacturers and is likely to reflect in market prices.

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