The Central Government has officially notified February 1, 2026, as the date on which the provisions of the Central Excise (Amendment) Act, 2025 will come into force. The notification was issued by the Ministry of Finance (Department of Revenue) on December 31, 2025.
Alongside this, the government has brought chewing tobacco, jarda scented tobacco and gutkha manufactured using packing machines under a special excise duty regime as notified goods under Section 3A of the Central Excise Act, 1944. This move marks the return of a capacity-based taxation system, where duty will be levied and collected based on the number and speed of packing machines installed in a factory, rather than actual production.
As per the notification, the levy will apply to:
- Chewing tobacco (Tariff Item 2403 99 10), including filter khaini
- Jarda scented tobacco (Tariff Item 2403 99 30)
- Gutkha (Tariff Item 2403 99 90)
All types of Form-Fill-Seal (FFS) packing machines, whether vertical or horizontal, single-track or multi-track, have been covered under the definition of "packing machine".
To operationalise the levy, the government has also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026, which will also take effect from February 1, 2026. These rules lay down detailed procedures for declaration of machines, verification by excise authorities, determination of production capacity, monthly duty payment, abatements for non-operation periods, and mandatory installation of CCTV surveillance systems at manufacturing premises.
Manufacturers will be required to file an initial declaration within seven days of commencement or installation of packing machines and pay monthly excise duty by the 6th of each month. Strict provisions have also been prescribed for under-declaration, non-declaration of retail sale price (RSP), and tampering with packaging details.
The move is aimed at curbing tax evasion, improving monitoring of high-risk tobacco products, and ensuring stable revenue collection from the sector through a predictable, machine-based excise duty mechanism.
Official copy of the notification has been attached
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