The Ministry of Finance has amended the excise duty framework for unmanufactured tobacco and tobacco refuse by issuing Notification No. 04/2026–Central Excise. The amendment modifies the earlier exemption notification dated December 31, 2025, and introduces a clear distinction between exempt and taxable categories of unmanufactured tobacco.
The notification has been issued under Section 5A(1) of the Central Excise Act, 1944, which empowers the Government to grant or withdraw exemptions in public interest. The Ministry of Finance stated that the changes are necessary to align tax treatment with regulatory and revenue considerations while preventing misuse of blanket exemptions.
What Has Changed?
The amendment revises the excise duty table contained in Notification No. 03/2025–Central Excise, replacing the earlier single entry with two distinct categories based on branding and retail packaging.
Unmanufactured tobacco or tobacco refuse falling under HSN 2401 will continue to attract nil excise duty, provided it meets both of the two conditions. Firstly, it does not bear any brand name, and secondly it is not packed for retail sale
This exemption primarily benefits farmers, primary aggregators, and bulk suppliers operating in unbranded and non-retail segments of the tobacco trade
A new entry (Sl. No. 1A) has been inserted to cover unmanufactured tobacco or tobacco refuse other than the exempt category. Such products will now attract an excise duty of 18%, bringing branded or retail-oriented unmanufactured tobacco firmly within the tax net.
Effective Date
The notification comes into force immediately, i.e., from 1 February 2026, the date of its publication in the Gazette of India (Extraordinary).
Notification Details
Notification No.. 04/2026-Central Excise
Date: 01/02/2026
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