India to replace expiring tobacco tax with new health and security cess in Dec 2025.

India plans to introduce a new Health Security and National Security Cess on tobacco products in December 2025, replacing the expiring GST compensation cess. The move, part of broader tax reforms, aims to maintain high tax rates on tobacco and fund public health and defense, with defense spending projected to rise 20% in 2026. The cess will be added to existing taxes and collected by the central government, ensuring continued revenue for critical sectors without expanding the tax base.