RECENT DEVELOPMENTS IN GOODS AND SERVICES TAX

It’s all good in the Indian economy which grew at a faster pace in first half of the current fiscal. The GDP recorded a growth of 8.2 percent which is much higher them 6.1% in same period last year. The growth has been witnessed in all sectors of economy, highest one being in services sector and lowest in agriculture. This could be achieved despite unfavourable external environment including enhanced US tariff. The growth rate of 8.2% is the highest growth in last six quarters. There is a robust economic growth and momentum in Indian economy.

The winter session of Parliament commences from 01.12.2025. Finance Minister introduced Health Security se National Security Cess Bill, 2025 in Lok Sabha which will replace the levy of Compensation Cess on tobacco and tobacco products like pan masala, gutka etc, besides imposing cess on cigarettes. The Central Excise Act, 1944 is also being amended. However, there is no change in the rates of cess and the presently applicable rates of cess shall continue. Thus, in effect, only the name changes. This will augment the resources for meeting expenditure on national security and for public health and to levy of cess for such purposes on the machines installed or other processes undertaken by which specified goods are manufactured or produced and for matters connected or incidental to such activities. On levy of new cess, Government will be able to maintain the effective rate of GST on tobacco and tobacco products after rate rationalization on September, 2025. The GST Council had approved for ending compensation cess and had authorized the Finance Minister to find a new mechanism to tax demerit goods.

The Central Government has introduced two new Bills in the Loksabha on 1st December 2025, the first day of the current monsoon session of the Parliament. These Bills are Health Security seNational Security Cess Bill, 2025 and Central Excise (Amendment) Bill, 2025 to levy a new cess on pan masala and to impose additional levy on cigarettes and other tobacco products. These will enable the Union Government to collect revenue from ‘sin goods’ to compensate for cess to be forgone and funding of expenditure on public health and national security measures. Till now, a cess was levied on such products w.e.f. 01.07.2017 which was shared with states to make good the revenue loss due to introduction of GST in the country. Further, Central Excise (Amendment) Bill, 2025 seeks to replace existing tariff table for tobacco and various tobacco products. The tax rates proposed are a steep rise from existing rates. With both Bills, tax revenue will get a boost to meet critical spending in national interest. It will augment the resources for meeting expenditure on national security and for public health, and to levy a cess for the said purposes on the machines installed or other processes undertaken by which specified goods are manufactured or produced, and for matters connected therewith or incidental thereto. Cess Bill proposes a monthly cess on machines used to produce specified goods, i.e., pan masala etc. This cess will be levied in addition to existing GST and excise duties.

Mr. Vivek Chaturvedi, IRS (C & IT) of 1990 batch has been appointed as Chairman, CBIC on superannuation of present Chairman, Mr. Sanjay Kumar Agarwal.

During November 2025, GST collections showed a modest increase of 0.7% which indicates a expansion in consumption with tax collection remaining almost flat owing to reduced GST rates since 22.09.2025. The collection is based on transactions of October, 2025 which is the first full month after GST rate cuts and was a festive period. Gross GST collections were seen at Rs. 1.70 lakh crore showing a growth of 0.3% on YoY basis. Gross domestic GST revenue fell by 2.3% to Rs. 1.24 lakh crore as against GST from imports which grew by 10% to Rs. 46,000 crore. The current trend reflects the absorption of rate cut impact by increased consumption of goods and services. The December, 2025 collection will be yet another significant test of tax sustainability.

The Health Security se National Security Cess Bill, 2025 (HSNSC)

• Introduced in Lok Sabha on 1st December, 2025.
• Aims at levy of cess on pan masala
• Presently pan masala is subject to 28% tax along with compensation cess.
• Bill proposes a monthly cess on machines used to produce specified goods, primarily pan masala or any other items that may be later notified.
• The cess will be computed based on machine speed, capacity and weight slabs of the packaged product, with a detailed framework laid out for registration, self declaration, monthly payment, audit, enforcement, confiscation and penalties.
• Cess would be levied in addition to existing GST and excise duties.
• The Bill has 9 Chapters viz, who is taxable person, what is HSNSC, registration, returns, audit & assessment, offences & penalties, inspection, search & seizure, appeals etc.
• Taxable person shall mean and include any person who owns, possesses, operates, manages, or is otherwise in control of the machine or undertakes any process by which specified goods are manufactured or produced, whether directly or through job-workers, employees, hired labour, or through any other person acting on his behalf under any arrangement.
• Cess will be computed based on the relevant process, speed of the machine or capacity of other processes and the weight of the specified goods packed in pouch, tin or other container, as the case may be, as declared by the taxable person and, where applicable, as verified or calibrated by the proper officer under section 9, and on the amount specified in Schedule II for such combination of process, speed or capacity and weight.
• There are two Schedules of cess rates-one for pan masala and other for processes- manual / machine based.
• The Bill shall be notified for implementation after enactment by way of a notification.

Central Excise (Amendment) Bill, 2025

• Introduced in Lok Sabha on 1st December 2025to amend Central Excise Act, 1944
• The objective of Bill is to give the Government, the fiscal space to increase the rate of central excise duty on tobacco and tobacco products so as to protect tax incidence and amend section IV of fourth Schedule to Central Excise Act, 1944.
• Seeks to impose an additional levy on cigarettes and various tobacco products.
• Presently these products attract a GST of 28% alongwith compensation cess
• The Bill provides for a new Central excise duty on tobacco products, such as cigarettes, chewing tobacco, cigars, hookahs, zarda, and scented tobacco, replacing the existing compensation cess.
• It will levy excise duty on cigars/cheroots/ cigarettes at a rate of Rs. 5,000 to Rs. 11,000 per 1,000 sticks, depending on length.
• It will also levy 60-70 percent on unmanufactured tobacco and 100 percent on nicotine and inhalation products.
• The new rates relate to:

• Unmanufactured Tobacco; Tobacco Refuse
• Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
• Other manufactured tobacco and manufactured tobacco substitutes; “Homogenised” or “Reconstituted” tobacco; Tobacco extracts and essences.
• Products containing tobacco, reconstituted tobacco, nicotine, or tobacco or nicotine substitutes, intended for inhalation without combustion; other nicotine containing products intended for the intake of nicotine into the human body.

• The Bill, once enacted, shall be notified for implementation from a notified date.

New CBIC Chairman

• The Appointment Committee Union Government has appointed Mr. Vivek Chaturvedi, IRS 1990 of batch as new CBIC Chairman.
• New CBIC Chairman will take over from Mr. Sanjay Kumar Agarwal, IRS who superannuation on 30.11.2025.
• Appointment of new Chairman shall be w.e.f. 01.12.2025.

(Source: Order dated 28.11.2025 issued by Department of Personnel and Training Secretariat of the Appointments Committee of the Cabinet)

GST Collection in November, 2025

• GST collection in November 2025, first full month’s GST (October, 2025) after GST rate rationalization is moderate with just 0.7% growth on YoY basis indicating strong consumption basis.
• Total gross GST collection in November is Rs. 1,70,276 crore is against Rs. 1,69,016 crore in November 2024 (0.7% growth)
• While gross domestic revenue recorded negative growth of 2.3% (Rs. 1,24,300 crore), imports showed a growth of 10.2% (Rs. 45,976 crore)
• Total refunds (domestic and exports) were also lower at Rs. 18,196 crore only recording a negative growth of 4%.
• Total net GST revenue stood at Rs. 1,52,079 crore against Rs. 1,50,062 crore in November, 2024. (a growth of just 1.3%)
• States such as Haryana, Arunachal Pradesh, Assam, Andaman, Manipur, Dadra showed a double digit growth but states like J & K, Punjab, Jharkhand, Odisha, Madhya Pradesh etc recorded a negative growth.
• Net cess revenue is Rs. 4006 crore as compensation cess continues only as a transitory arrangement till loans / interest are paid off.

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