Effective February 1, a new tax structure combining GST and a machine-capacity-based cess will be implemented on pan masala manufacturing. This dual approach aims to enhance tax revenue by improving evasion detection through value and capacity tracking. The total tax incidence remains at 88 percent, with GST levied on the retail sale price and the cess on installed production capacity. Sources indicate this will significantly reduce under-reporting and clandestine production in the sector.