Finance Minister Nirmala Sitharaman on Wednesday (December 3, 2025) said the levy of excise on tobacco will ensure that incidence of tax on the demerit good remains same even after the expiry of the GST compensation cess. Moving the Central Excise (Amendment) Bill, 2025, for discussion and passage in the Lok Sabha, the Finance Minister said since the GST law caps maximum rate of tax at 40%, the ultimate tax incidence on tobacco after removal of GST cess would come down from the current level if excise duty is not levied. “In order to ensure that the incidence is not lower than what it was during GST with the compensation cess, we are bringing this excise. In a way we are saying cigarettes should not become affordable now because incidence has become lesser,” the Minister said.