UPSC Prelims Practice Questions — Tobacco tax rejig to take effect from Feb. 1

Q1. How many new Central legislations were enacted in the Winter Session of Parliament, 2025, as the legal scaffolding for the tobacco taxation rejig that became operative on 1 February 2026?

  • A. One
  • B. Two
  • C. Three
  • D. Four

Q2. Which one of the following is the principal parent statute whose Fourth Schedule has been substituted by the Central Excise (Amendment) Act, 2025, to re-establish central excise as the lead levy on tobacco products from 1 February 2026?

  • A. The Central Excise Act, 1944
  • B. The Central Excise Tariff Act, 1985
  • C. The Goods and Services Tax (Compensation to States) Act, 2017
  • D. The Central Goods and Services Tax Act, 2017

Q3. With reference to how the tobacco tax regime operative from 1 February 2026 differs from the pre-existing regime, consider the following statements: 1. The Central Excise Duty on cigarettes has been raised from a range of Rs 200–735 to Rs 2,700–11,000 per 1,000 sticks. 2. The GST Compensation Cess earlier levied on tobacco products has been reduced to nil under the new regime. 3. The new regime imposes a uniform GST rate of 40% on all tobacco products, including biris. Which of the statements given above is/are correct?

  1. The Central Excise Duty on cigarettes has been raised from a range of Rs 200–735 to Rs 2,700–11,000 per 1,000 sticks.
  2. The GST Compensation Cess earlier levied on tobacco products has been reduced to nil under the new regime.
  3. The new regime imposes a uniform GST rate of 40% on all tobacco products, including biris.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. Under which one of the following Acts is the new cess on pan masala manufacturing units — operative from 1 February 2026 and earmarked for public health and national security expenditure — levied?

  • A. The Central Excise (Amendment) Act, 2025
  • B. The Health Security se National Security Cess Act, 2025
  • C. The Goods and Services Tax (Compensation to States) Act, 2017
  • D. The Finance Act, 2025
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