CBIC Notifies New RSP-Based Valuation, 40% GST Rate On Pan Masala And Tobacco Products From February 1

The Central Board of Indirect Taxes and Customs (CBIC) has notified a new retail sale price (RSP)-based valuation mechanism and revised GST framework for pan masala, cigarettes, cigars, and other tobacco products, effective from February 1, 2026.

Under the new regime, these products will attract a 40% GST rate, along with amendments to the GST Rules.

The move is part of a phased plan to withdraw the Compensation Cess on pan masala, tobacco, and allied products, for which a nil rate has been prescribed.

The changes aim to streamline valuation, curb tax evasion, and rationalise indirect taxation on sin goods.