Economy- 4 Taxes on Vimal Gutkha & Pan Masala! GST, NCCD, Central Excise Duty, Health-Security Cess

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Timestamps:
0:00 Introduction to New Taxes on Gutkha
0:09 Pre-GST Taxation Chronology
0:38 Post-GST: CGST, SGST, NCCD & Compensation Cess
1:10 Why New Taxes After Cess Ends in 2026
1:39 Two Categories: Tobacco vs Non-Tobacco Products
2:00 Central Excise Duty on Tobacco Products
2:17 Health & Security Cess on Pan Masala
2:46 Non Ad-Valorem Nature of New Taxes
3:02 Effective Tax ~53% vs WHO 75% Recommendation
3:23 Revenue Sharing with States
3:54 Criticisms & Concerns
4:24 GST Evolution: 28% to 40% to 53%
4:56 Unacademy 10th Anniversary Celebration
5:10 Live Stream on 10th Dec & New Economy Classes

In this crucial Economy lecture for UPSC CSE 2026/2027, renowned educator Dr. Mrunal Patel explains the latest government move to impose additional taxes on gutkha, pan masala, and tobacco products to prevent them from becoming cheaper after the GST Compensation Cess ends in March 2026.

Before GST (pre-2017), central excise duty was levied on production, while states charged VAT on sales. Post-GST in 2017, these were replaced by CGST + SGST (destination-based), along with National Calamity Contingent Duty (NCCD) for disaster management and Compensation Cess to compensate states for revenue loss.

With Compensation Cess set to expire, the government has introduced two new bills in the Winter Session of Parliament to maintain high taxation and discourage consumption:

1. Central Excise Duty on tobacco products (gutkha, beedi, cigarette, hookah) – specific duty based on quantity (per kg or unit length), not ad-valorem (percentage of price).

2. Health and Security Cess on non-tobacco pan masala – based on manufacturing capacity (number of machines and pouches per minute).

Currently, these sin goods attract 40% GST (20% CGST + 20% SGST under GST 2.0 from Sept 2025, up from earlier 28%). Adding the new duties/cess and NCCD, effective taxation will reach around 53% of MRP.

World Health Organization recommends at least 75% taxation on tobacco products for effective control. Questions remain on revenue sharing with states (41% devolution applicable to excise but unclear for Health Cess), exact utilisation for health schemes (cancer/TB patients), and potential rise in smuggling of loose tobacco.

This update is vital for UPSC, SSC-CGL, State PSC, Banking, IBPS, RBI, CAPF, CDS, and other competitive exams where current affairs and Indian Economy are key.



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