GoI Withdraws 18% Excise Duty on Unmanufactured Tobacco

Current Context: On 1 February 2026, the Government of India withdrew the 18% excise duty on unbranded, unmanufactured tobacco through a gazette notification issued alongside the Union Budget 2026–27.

• The duty, originally imposed in December 2025 as part of restructuring “sin taxes” after the phase-out of the GST Compensation Cess, had triggered strong protests from farmers and traders.
• The withdrawal applies specifically to unbranded, unpacked tobacco and refuse, restoring the rate to NIL, while branded or retail-packed tobacco continues to attract 18% duty.
• Farmers in Karnataka, Andhra Pradesh, and Telangana had warned that the levy would depress crop prices, and traders had boycotted auction platforms, halting nearly 45% of annual sales.
• Following intense representations by the Tobacco Board and MPs, Finance Minister Nirmala Sitharaman rolled back the duty to protect farmer livelihoods.

Question:

Q.1 Following the withdrawal, what is the excise duty status of branded or retail-packed tobacco?
a) Fully exempted
b) Reduced to 5%
c) Reduced to 12%
d) Continues to attract 18% duty

Answer: d) The rollback does not apply to branded or retail-packed tobacco, which still attracts 18% excise duty.