Under the revised norms, raw tobacco sold by farmers in bulk without branding or retail packaging will attract zero excise duty with effect from February 1, 2026. File.
| Photo Credit: G. N. Rao
Andhra Pradesh Chief Minister N. Chandrababu Naidu has welcomed the Union Government’s decision to reduce excise duty to zero on unbranded raw tobacco products, describing it as a significant step that will benefit tobacco farmers and small traders in the State.
Mr. Naidu, on Wednesday (February 4, 2026), said that the decision follows a gazette notification issued by the Union Ministry of Finance clarifying the excise duty structure applicable to unprocessed tobacco (HS Code 2401). As per the notification, excise duty on unbranded, unpacked raw tobacco sold at the retail level has been reduced to zero, he said.
The Andhra Pradesh government has formally taken note of and supported this move.
The Chief Minister said the notification brings much-needed clarity, uniformity, and transparency in tobacco taxation. Earlier, ambiguity in distinguishing between bulk unbranded tobacco and packaged retail products had led to legal and operational difficulties, adversely affecting farmers and traders. These issues, he noted, often resulted in losses due to differing interpretations of tax provisions.
Under the revised norms, raw tobacco sold by farmers in bulk without branding or retail packaging will attract zero excise duty with effect from February 1, 2026. However, tobacco products packed in small retail packets or carrying company brand names will continue to attract an 18 per cent excise duty.
Mr. Naidu said the new policy will ease the raw tobacco supply chain while safeguarding government revenue from commercial and branded sales. Clear guidelines are also expected to reduce disputes during auditing and billing and curb misuse of tax benefits.
The Chief Minister emphasized that the decision would ensure better prices for farmers, support small traders, and boost exports. Andhra Pradesh has urged the Union Government and the Central Board of Indirect Taxes and Customs (CBIC) to ensure strict and uniform implementation of the notification across the country
Published – February 04, 2026 09:56 am IST
