New Delhi: The government will introduce two key bills in the Lok Sabha during the Winter Session starting Monday to replace the Goods and Services Tax (GST) compensation cess on goods such as tobacco and pan masala with an excise levy, ensuring that the high taxation on these products continues.

Finance Minister Nirmala Sitharaman is set to table The Central Excise Amendment Bill, 2025, and The Health Security National Security Cess Bill, 2025, sources confirmed. The session will also take up discussions and voting on the first batch of Supplementary Demands for Grants for 2025-26.

The Health Security National Security Cess Bill, 2025, aims to replace the compensation cess on pan masala. The bill seeks to generate additional resources for national security and public health expenditure by levying a cess on machinery or processes used in the manufacture of specified goods.

Currently, tobacco and pan masala are taxed at 28% GST, with an additional compensation cess at varied rates. The cess was extended by four years until March 31, 2026, primarily to repay the loans the Centre took to compensate states for GST revenue shortfalls during the Covid period.

With these loans expected to be fully repaid by December, the GST compensation cess on tobacco and pan masala will need to be phased out. The GST Council had earlier decided to continue the cess on these goods until the loans were repaid. The compensation cess on other luxury items ended on September 22, 2025, following GST rate rationalisation, which fixed luxury goods and sugary drinks like Pepsi and Coke at a 40% rate.

Other bills scheduled for introduction during the Winter Session include the National Highways (Amendment) Bill, Atomic Energy Bill, Corporate Laws (Amendment) Bill, Insurance Laws (Amendment) Bill, and the Higher Education Commission of India Bill, 2025.