The Central Government has issued Notification No. 03/2025–Central Excise dated 31 December 2025 under section 5A(1) of the Central Excise Act, 1944, superseding the earlier exemption notification of July 2019. In public interest, the notification restructures excise duty by granting conditional exemption to specified tobacco and tobacco-substitute products so that duty is capped at revised ad valorem rates or specific amounts listed in a comprehensive table. The revised framework covers unmanufactured tobacco, cigarettes of various lengths (filter and non-filter), cigars and cigarillos, smoking mixtures, chewing tobacco, jarda scented tobacco, snuff, gutkha, tobacco extracts, cut-tobacco, and inhalation products containing tobacco or substitutes. By prescribing differentiated rates—ranging from nil or moderate percentages to high specific duties per thousand sticks—the notification rationalizes the excise burden across product categories. The new rates and exemptions will apply from 1 February 2026, impacting valuation, pricing, and compliance for manufacturers and importers.
MINISTRY OF FINANCE
(Department of Revenue)
Notification No. 03/2025-Central Excise | Dated: 31st December, 2025
G.S.R. 955(E).— In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) (hereinafter referred to as the Excise Act), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 3/2019-Central Excise, dated the 6th July, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 486(E), dated the 6th July, 2019, except as respect things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below and falling within the Chapter, heading or sub-heading or tariff item of the Fourth Schedule to the Excise Act, as specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the said Schedule to the Excise Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table:
TABLE
| Sl. No. |
Heading or subheading or tariff item |
Description of goods | Rate |
| (1) | (2) | (3) | (4) |
| 1. | 2401 | All Goods | 18% |
| 2. | 2402 10 | All Goods | 21% or Rs. 4170 per thousand |
| 3. | 2402 20 10 | Other than filter cigarettes, of length not exceeding 65 millimetres | Rs. 2050 per thousand |
| 4. | 2402 20 20 | Other than filter cigarettes, of length exceeding 65 millimetres but not exceeding 70 millimetres | Rs. 3600 per thousand |
| 5. | 2402 20 30 | Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) not exceeding 65 millimetres | Rs. 2100 per thousand |
| 6. | 2402 20 40 | Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 65 millimetres but not exceeding 70 millimetres |
Rs. 4000 per thousand |
| 7. | 2402 20 50 | Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 70 millimetres but not exceeding 75 millimetres |
Rs. 5400 per thousand |
| 8. | 2402 20 90 | Other | Rs. 8500 per thousand |
| 9. | 2402 90 10 | Cigarettes of tobacco substitutes | Rs. 4006 per thousand |
| 10. | 2402 90 20 | Cigarillos of tobacco substitutes | 12.5% or Rs. 4006 per thousand, whichever is higher |
| 11. | 2402 90 90 | Other | 12.5% or Rs. 4006 per thousand, whichever is higher |
| 12. | 2403 11 10 | Hukkah or gudaku tobacco | 33% |
| 13. | 2403 11 90 | Other | Nil |
| 14. | 2403 19 10 | Smoking mixtures for pipes and cigarettes | 279% |
| 15. | 2403 19 90 | Other | 19% |
| 16. | 2403 91 00 | “Homogenised” or “reconstituted” tobacco | 60.5% |
| 17. | 2403 99 10 | Chewing tobacco | 82% |
| 18. | 2403 99 20 | Preparations containing chewing tobacco | 60.5% |
| 19. | 2403 99 30 | Jarda scented tobacco | 82% |
| 20. | 2403 99 40 | Snuff | 60.5% |
| 21. | 2403 99 50 | Preparations containing snuff | 60.5% |
| 22. | 2403 99 60 | Tobacco extracts and essence | 57% |
| 23. | 2403 99 70 | Cut-tobacco | 8% |
| 24. | 2403 99 90 | Gutkha | 91% |
| 25. | 2403 99 90 | All goods (Other than Gutkha) | 81% |
| 26. | 2404 11 10 | Containing tobacco or reconstituted tobacco | 60.5% |
| 27. | 24041900 | Other | 60.5% |
2. This notification shall come into force on the 1st February, 2026.
[F. No. CBIC-190349/72/2025-TRU]
DHEERAJ SHARMA, Under Secy.
