The CBIC has issued notification no. 03/2025-compensation cess(rate) dated 31.12.2025, amended Notification No. 1/2017–Compensation Cess (Rate) dated 28 June 2017. By this amendment, the Compensation Cess rate has been reduced to “Nil” for all entries listed in the Schedule. Effectively, no Compensation Cess will be leviable on any goods covered under the Schedule to the said notification.

Said Schedule Tabulated as under:

S. No.	Description of Goods	Old	New
1.	Pan-masala with declared retail sale price	0.32R per unit	Nil
2.	Pan Masala, other than goods covered under S. No.  1 above	60%	Nil
3.	Unmanufactured tobacco (without   lime   tube) –bearing a brand name with declared retail sale price	0.36R per unit	Nil
4.	Unmanufactured tobacco (without lime tube)–bearing a brand name, other than goods covered under S.No.5 above	71%	Nil
5.	Unmanufactured tobacco (with lime tube) – bearing a brand name with declared retail sale price	0.36R per unit	Nil
6.	Unmanufactured tobacco (with lime tube)–bearing a brand name, other than goods covered under S. No.6 above.	65%	Nil
7.	Tobacco refuse, bearing a brand name with declared retail sale price]	0.32R per unit	Nil
8.	Tobacco refuse, bearing a brand name, other than goods covered under S. No.7 above	61%	Nil
9.	Cigar and cheroots	21% or Rs. 4170 per thousand, whichever is higher	Nil
10.	Cigarillos	21% or Rs. 4170 per thousand, whichever is higher	Nil
11.	Cigarettes containing tobacco other than filter cigarettes, of length not exceeding 65 millimetres	5% + Rs. 2076 per thousand	Nil
12.	Cigarettes containing tobacco other than filter cigarettes, of length exceeding 65 millimetres but not exceeding 75 millimetres	5%+ Rs. 3668 per thousand	Nil
13.	Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) not exceeding 65 Millimetres	5% + Rs. 2076 per thousand	Nil
14.	Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 65 millimetres but not exceeding 70 millimetres	5% + Rs. 2747 per thousand	Nil
15.	Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 70 millimetres but not exceeding 75 millimetres	5% + Rs. 3668 per thousand	Nil
16.	Other cigarettes containing tobacco	36% + Rs. 4170 per thousand	Nil
17.	Cigarettes of tobacco substitutes	Rs.4006 per thousand	Nil
18.	Cigarillos of tobacco substitutes	12.5% or Rs. 4,006 per thousand whichever is higher	Nil
19.	Other	12.5% or Rs.4,006 per thousand whichever is higher	Nil
20.	‘Hookah’ or ‘gudaku’ tobacco bearing a brand name with declared retail sale price	0.36R per unit	Nil
21.	‘Hookah’ or ‘gudaku’ tobacco, bearing a brand name, other than goods covered under S.No.19 above	72%	Nil
22.	Tobacco used for smoking ‘hookah’ or ‘chilam’ commonly known as ‘hookah’ tobacco or ‘gudaku’ not bearing a brand name with declared retail sale price	0.12R per unit	Nil
23.	Tobacco   used   for   smoking   ‘hookah’   or   ‘chilam’ commonly known as ‘hookah’ tobacco or ‘gudaku’, not bearing a brand name, other than goods covered under S.No. 20 above	17%	Nil
24.	Other water pipe smoking tobacco not bearing a brand name with declared retail sale price.	0.08R per unit	Nil
25.	Other water pipe smoking tobacco, not bearing a brand name, other than goods covered under S. No.21 above	11%	Nil
26.	Smoking mixtures for pipes and cigarettes, with declared retail sale price	0.69R per unit	Nil
27.	Smoking  mixtures  for  pipes  and  cigarettes,  other  than goods covered under S.No.22 above	290%	Nil
28.	Other smoking tobacco bearing a brand name with declared retail sale price	0.28R per unit	Nil
29.	Other smoking tobacco bearing a brand name, other than goods covered underS.No.23 above	49%	Nil
30.	Other smoking tobacco not bearing a brand name with declared retail sale price	0.08R per unit	Nil
31.	Other  smoking  tobacco,  not  bearing  a  brand  name,  other  than goods covered under S.No.24 above	11%	Nil
32.	“Homogenised” or “reconstituted” tobacco, bearing a brand name with declared retail sale price	0.36R per unit	Nil
33.	“Homogenised”  or  “reconstituted”  tobacco,  bearing  a  brand name,  other goods covered under S.No.24 B above	72%	Nil
34.	“Homogenised” or “reconstituted” tobacco, bearing a brand name	72%	Nil
35.	Chewing tobacco (without lime tube),with declared retail sale price	0.56R per unit	Nil
36.	Chewing tobacco (without lime tube), other than goods covered under S.No.26 above	160%	Nil
37.	Chewing tobacco (with lime tube),with declared retail sale price	0.56R per unit	Nil
38.	Chewing tobacco (with lime tube), other than goods covered under S.No.27 above	142%	Nil
39.	Filter khaini, with declared retail sale price	0.56R per unit	Nil
40.	Filter khaini,  other than goods covered under S.No.28 above	160%	Nil
41.	Preparations containing chewing tobacco, with declared retail sale price	0.36R per unit	Nil
42.	Preparations containing chewing tobacco, other than goods covered under S.No.29 above	72%	Nil
43.	Jarda scented tobacco, with declared retail sale price	0.56R per unit	Nil
44.	Jarda scented tobacco, other than goods covered under S.No.30 above	160%	Nil
45.	Snuff, with declared retail sale price	0.36R per unit	Nil
46.	Snuff, other than goods covered under S.No.31 above	72%	Nil
47.	Preparations  containing  snuff, with  declared retail sale price	0.36R per unit	Nil
48.	Preparations containing snuff, other than goods covered under S. No. 32 above	72%	Nil
49.	Tobacco extracts and essence bearing a brand name with declared retail sale price	0.36R per unit	Nil
50.	Tobacco  extracts  and  essence,  bearing  a  brand  name, other than good covered under S.No.33 above	72%	Nil
51.	Tobacco extracts and essence not bearing a brand Name with declared retail sale price	0.36R per unit	Nil
52.	Tobacco  extracts  and  essence,  not  bearing  a  brand name, other than goods covered under S.No.34 above	65%	Nil
53.	Cut tobacco, with declared retail sale price	0.14R per unit	Nil
54.	Cut tobacco, other than goods covered under S.No.35 above	20%	Nil
55.	Pan  masala  containing  tobacco  ‘Gutkha’, with declared retail sale price	0.61R per unit	Nil
56.	Pan   masala   containing   tobacco  ‘Gutkha’,   other   than goods covered under S.No.36 above	204%	Nil
57.	All  goods,  other  than  pan  masala  containing  tobacco  ‘gutkha’, bearing a brand name, with declared retail sale price	0.43R per unit	Nil
58.	All  goods,  other  than  pan  masala  containing  tobacco  ‘gutkha’, bearing a brand name, other than good covered under S.No.36B above	96%	Nil
59.	All goods, other than pan masala containing tobacco ‘gutkha’, not bearing a brand name, with declared retail sale price	0.43R per unit	Nil
60.	All goods, other than pan masala containing tobacco ‘gutkha’, not bearing a brand name, other than goods covered under S.No.36D above	89%	Nil
61.	All goods, other than pan masala containing tobacco ‘gutkha’, bearing a brand name	96%	Nil
62.	All goods, other than pan masala containing tobacco ‘gutkha’, not bearing a brand name	89%	Nil

To read the complete Notification https://taxo.online/wp-content/uploads/2026/01/03-2025-CompensationCess-Rate-Eng.pdf