According to the revised norms, raw tobacco sold by farmers in bulk without branded or retail packaging is subject to zero excise duty with effect from February 1, 2026. File. | Photo credit: GN Rao
Andhra Pradesh Chief Minister N. Chandrababu Naidu has welcomed the Union government’s decision to reduce excise duty on unbranded raw tobacco products to zero, terming it a significant step that will benefit tobacco farmers and small traders in the state.
Mr. Naidu said on Wednesday (February 4, 2026) that the decision follows a gazette notification issued by the Union Finance Ministry clarifying the excise duty structure applicable to unprocessed tobacco (HS code 2401). Excise duty on unbranded, unpackaged raw tobacco sold at the retail level has been reduced to zero, according to the notification, he said.
The Government of Andhra Pradesh formally took cognizance of the move and supported it.
The Chief Minister said that the notification brings much needed clarity, uniformity and transparency in tobacco taxation. Previously, the ambiguity in distinguishing between bulk unbranded tobacco and packaged retail products led to legal and operational difficulties that adversely affected farmers and traders. These problems, he noted, often led to losses due to differing interpretations of tax reserves.
Under the revised norms, raw tobacco sold to farmers in bulk without branding or retail packaging will be subject to zero excise duty with effect from February 1, 2026. However, tobacco products packed in small retail packs or bearing brand names will continue to be subject to 18 percent excise duty.
Mr Naidu said the new policy would ease the supply chain of raw tobacco while protecting the government’s revenue from commercial and branded sales. Clear guidelines are also expected to reduce audit and accounting disputes and curb abuse of tax benefits.
The Chief Minister emphasized that the decision will 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 – 04 Feb 2026 09:56 IST
