Relevant Context:
When GST started in 2017, the government introduced the GST Compensation Cess (for a time period of 5 years) to help initially support states whenever their GST revenue fell short. It was levied on goods like tobacco products, pan masala, coal, and luxury cars/SUVs, which could bear an extra tax without affecting essential consumption. Because this new cess was added on top, the older central excise duty on tobacco was reduced so that the total tax on tobacco wouldn’t become too high.

It was only meant to exist until 2022, but during COVID the government had to borrow from this fund to support state revenues. Once those loans are fully repaid, the law requires the cess to stop. Now, that compensation cess is about to end.

If the cess ends and excise duty stays low, tobacco will suddenly become much cheaper, reducing government revenue, and making harmful products more affordable. So, the government is raising excise duty now to make sure that when the cess disappears, the overall tax on tobacco stays roughly the same.

Provisions of the Bill:

Excise Duty on all tobacco products was increased. The Bill updates rates across all tobacco categories. Exact duties on specific tobacco products include:

1. Raw tobacco duties: 64% to 70%
2. Finished and manufactured tobacco products: Varying based on products in the range of 2x- 10x of the original.
3. Cigarettes: Broadly a 10x increase, from ₹200–₹735 to ₹2,700–₹11,000.
4. Chewing tobacco, snuff-like products, and mixtures: From a 25–60% duty to a 100–325% duty.
5. Hookah/gudaku tobacco: A 50–60% rise in duties
6. Nicotine or tobacco products which are meant for inhalation without burning: Brought to a uniform 100% duty rate

Policy Implications:

1. Public Health Protection: Keeping overall taxes at the same level ensures tobacco does not become cheaper once the compensation cess ends. This keeps smoking and smokeless tobacco products less affordable, which is one of the most effective ways to discourage consumption, especially among young people.
   For you: Harmful products don’t suddenly become cheaper or more accessible.
   
2. Stable Revenue for Governments: Tobacco is a major revenue source. Without this revision, the end of the cess would create a sudden drop in tax collections. The updated excise rates protect both central and state revenues.
   For you: Governments retain funds for public services without turning to new or higher taxes on everyday items.
   
3. Amends Low-Tax Loopholes: Before the amendment, some tobacco products were taxed much lower than others (certain chewing tobaccos, smoking mixtures, specific cigarette sizes). The updated rates align these variations so companies cannot shift to cheaper categories to avoid higher taxes.
   For you: Manufacturers can’t introduce “low-tax” tobacco alternatives that end up being cheaper and more widely consumed.

Relevant Context:
When the Centre updated the GST law through the Finance Act, 2025, states were required to mirror those changes so the national GST system stays consistent. Since Manipur is under President’s Rule and Parliament was not in session, an Ordinance was used first, but now it must be replaced by a proper Act which will ensure Manipur matches national standards.

Provisions of the Bill:

1. Track and Trace System: The Bill introduces a track and trace system for specified goods (The central government will later specify which goods are covered. The government will mandate non removable, secure identification markings (digital or physical) to track them. It creates a new penalty for failure to comply with the track and trace system: one lakh rupees or ten percent of the tax on the goods, whichever is higher.
2. Credit Notes: The bill revises credit note rule, which is when a seller is allowed to reduce the GST they owe because something changed in the original sale, such as an incorrect price, a return, or faulty goods. The amendment adds an important condition: the seller cannot reduce their GST if the buyer has already used the GST credit from that invoice. This is because the buyer has already used that GST to lower their own tax, so allowing the seller to reduce their GST as well would create a double benefit from the same transaction.
3. Penalty Appeals: If someone wants to challenge a penalty under GST (a fine for noncompliance with the national GST act, in essence, a fine for not paying the GST), they must first pay a portion of that penalty before the appeal can be filed. This is meant to stop unnecessary appeals. For an appeal before the Appellate Authority, 10% of the penalty amount is to be paid. For an appeal before the Appellate Tribunal, an additional 10% of the penalty amount.
4. SEZ/FTWZ Exemptions: The bill exempts certain goods from SGST when they are stored in Special Economic Zones (SEZs) or Free Trade Warehousing Zones (FTWZs). These zones are special areas where businesses get tax and other benefits to encourage investment and exports. The exemption applies when goods are supplied from these zones either to another person before they are cleared for export, or to the rest of India outside the zones (called the Domestic Tariff Area (DTA)). This means businesses moving goods from these special zones won’t have to pay SGST on those transactions until the goods leave the zone for domestic consumption or export.
5. Updated Definitions: Manipur-specific definitions are updated to match the 2025 Central GST amendments, including terms such as “local fund”, “municipal fund”, and “unique identification marking”.

Policy Implications:

1. Track and Trace: Strengthens tax enforcement and makes it harder to divert or misreport high-risk goods. This improves compliance and closes monetary leakages in sectors known for tax evasion.
   For you: This means goods you buy are less likely to be fake or misreported, and the government can keep taxes fair.
2. Credit Notes: Prevents double benefits and protects revenue so sellers don’t pay less GST unfairly.
   For you: This ensures that prices are fair and sellers cannot reduce their taxes in a way that might shift the burden on you unfairly.
3. Appeals in Penalty Cases: Requiring a deposit ensures faster dispute resolution and discourages frivolous appeals. 
   For you: If you face a illegitimate GST penalty, your case is likely to be resolved faster and more predictably.
4. SEZ and FTWZ Exemptions: Clearer tax treatment of goods in special zones reduces disputes and speeds up movement of goods while supporting exporters and SEZ operators. 
   For you: Products from these zones reach stores faster, and exporters can operate more smoothly, which may keep prices stable and improve availability.
5. Updated Definitions: Alignment with the Central GST law maintains uniformity across states, which is essential for GST’s national structure and smooth implementation.
   For you: It’s easier for you to understand taxes, whether you’re buying or selling goods in Manipur, because the rules match the rest of India.