Starting February 1, 2026, India will implement a new tax regime for tobacco and pan masala products, replacing the GST compensation cess. New levies include a Health and National Security Cess on pan masala and additional excise duty on tobacco products, alongside existing GST rates. This restructuring aims to maintain high tax incidence on these items, with pan masala and tobacco products facing a 40% GST, and biris 18%. The move follows parliamentary approval of new legislation designed to disincentivize consumption and ensure adequate tax revenue.