Andhra Pradesh Chief Minister N. Chandrababu Naidu has expressed his approval of the Central Government’s decision to eliminate excise duty on unbranded raw tobacco products. This move is expected to benefit the unbranded tobacco trade within the state. The state government has acknowledged the gazette notification issued by the Central Finance Ministry regarding this matter.
The Finance Ministry’s gazette notification clarifies the duty structure concerning unmanufactured tobacco. It specifies that going forward, there will be zero excise duty on retail sales of unbranded tobacco. This step aims to bring uniformity, clarity, and transparency to the taxation of tobacco sales. Chief Minister Naidu views this decision as a significant advancement.
The lack of clear distinctions in the past regarding the purchase, sale, and trade of unbranded bulk tobacco led to challenges due to varying provisions in the law. To address the losses faced by farmers and traders under such ambiguous policies, the decision was made to reduce the duty on unbranded products to zero percent. This gazette is intended to alleviate the complexities arising from different classifications in excise duty imposition.
Chief Minister Chandrababu Naidu emphasized that the Central Government’s decision will benefit all tobacco farmers. He highlighted that it will not only ensure favorable prices for farmers but also support traders and exporters. The implementation of clear guidelines and regulations is expected to significantly reduce excise duty evasion. The Andhra Pradesh government stands in favor of this policy to prevent tax benefits through fraudulent means.
The state government has urged the Central Government and the Central Board of Indirect Taxes and Customs to ensure consistent and thorough enforcement of this notification nationwide. Effective from February 1, 2026, unbranded tobacco products falling under the HS 2401 code and not packaged for retail sale will be exempt from excise duty. However, tobacco products packaged for shops and those with company branding will be subject to an 18 percent excise duty, as outlined in the gazette by the Central Finance Ministry.
These changes in excise duty are anticipated to ease the raw tobacco supply system without impacting government revenue from commercially sold products.
