Finance Minister Nirmala Sitharaman on Wednesday assured Parliament that the government has not increased taxes on beedis, clarifying that the overall tax burden remains unchanged due to adjustments between GST and excise structure.
Speaking during the debate on the Central Excise (Amendment) Bill 2025 in the Lok Sabha, Sitharaman emphasised:
“There is no change in the tax incidence on beedi. Not even a single paisa of tax has been increased.”
GST Reduced, Excise Added To Maintain Same Tax Incidence
The Finance Minister explained that in September, the GST rate on beedis was reduced from 28% to 18%, creating a gap that is now being compensated through the revised excise duty.
Under the new structure, unmanufactured tobacco will attract an excise duty of 60–70%.
Sitharaman clarified that since the GST compensation cess—previously applied on demerit goods like tobacco—is being phased out, the new excise regime ensures that the tax burden remains the same as before.
MPs Raise Concerns Over Beedi Workers’ Livelihood
Several MPs flagged the risk of higher taxes affecting the livelihoods of lakhs of beedi workers across India. Responding to this, the Finance Minister detailed the government’s welfare initiatives aimed at supporting workers in the beedi industry.
Government Schemes For Beedi Workers
Healthcare:
- 10 hospitals and 279 dispensaries dedicated to beedi workers
- Reimbursement for specialised treatments such as:
– Cancer
– Tuberculosis
– Heart diseases
– Kidney transplantation
Education Support:
- Financial assistance for children of beedi workers from Class 1 to university level
- Annual scholarship ranging from ₹1,000 to ₹25,000 depending on the class/course
Housing Support:
- ₹1.50 lakh subsidy for constructing pucca houses under Pradhan Mantri Awas Yojana (PMAY)
Central Excise (Amendment) Bill 2025 Passed
The Lok Sabha passed the Central Excise (Amendment) Bill 2025 through a voice vote.
The bill seeks to:
- Amend the Central Excise Act, 1944
- Revise excise tax rates once the GST compensation cess ends
- Ensure that demerit goods like tobacco products continue to face the same tax incidence
The revised excise structure will apply to:
- Cigarettes
- Chewing tobacco
- Cigars
- Hookah
- Zarda
- Scented tobacco
Sitharaman underlined that the shift from GST compensation cess to excise duty ensures continuity in taxation, safeguarding revenue while maintaining public health imperatives.