The 56th GST Council meeting, held on 3rd September 2025, has introduced higher GST rates on products considered harmful to public health. From 22nd September 2025, tobacco, pan masala, and sugary or caffeinated beverages will attract a steep 40% GST/cess, up from 28%. This move is aimed at discouraging consumption of unhealthy products while increasing revenue for health-related programs.
🚬 Tobacco Products at Higher GST
Tobacco and related products have seen a sharp tax hike:
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Unmanufactured Tobacco & Tobacco Refuse – 40% GST (earlier 28%)
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Cigars, Cigarillos & Cigarettes – 40% GST
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Manufactured Tobacco & Substitutes – 40% GST
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Products containing tobacco or nicotine substitutes (for inhalation) – 40% GST
However, one notable exception is:
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Bidis – GST reduced from 28% to 18% to support the local bidi industry.
🌿 Pan Masala Now at 40% GST
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Pan Masala (2106 90 20) – GST increased from 28% to 40%
This hike is expected to act as a deterrent against mass consumption and to address rising health concerns linked to tobacco chewing products.
🥤 Sugary, Aerated & Caffeinated Drinks at 40% GST
The Council has imposed the same 40% GST rate on beverages known to have adverse health effects:
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Aerated Waters & Sweetened Beverages
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Carbonated Fruit Drinks & Beverages with Fruit Juice
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Caffeinated Beverages
This makes soft drinks and energy drinks significantly costlier from September 2025.
📅 Effective Date
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All revised GST rates for tobacco, pan masala, and beverages will apply from 22nd September 2025.
✅ Impact on Consumers & Businesses
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Consumers: Prices of cigarettes, pan masala, and sugary/caffeinated drinks will rise sharply, discouraging excess consumption.
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Businesses: Tobacco and beverage companies may face reduced demand due to higher prices.
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Public Health: The move aligns with government initiatives to curb lifestyle diseases and reduce tobacco-related health risks.
🔎 FAQs on GST Hike for Tobacco & Drinks
Q1. Why has GST increased on these items?
👉 To discourage unhealthy consumption and generate revenue for health initiatives.
Q2. Are all tobacco products under 40% GST?
👉 Yes, except bidis, which now attract 18% GST.
Q3. Will cold drinks and packaged juices also get costlier?
👉 Yes, aerated, sweetened, carbonated, and caffeinated beverages will now face 40% GST.
Conclusion
The hike in GST on tobacco, pan masala, and sugary/caffeinated beverages is a bold public health measure. By making these products more expensive, the government aims to discourage consumption and reduce health risks. At the same time, the revenue generated can support healthcare programs, making it a win for public health and policy.