Zero Excise Duty On Raw Tobacco Brings Relief

In a major relief for tobacco farmers and small traders, the Central Government’s decision to remove excise duty on unbranded raw tobacco has been welcomed across Andhra Pradesh. From February 1, excise duty on unbranded and unpackaged tobacco sold at the retail level has been reduced to zero percent. Many in the farming community believe this change will remove long-standing complications and bring clarity to the trade.

Earlier, confusion over excise duty classifications caused repeated challenges for farmers selling raw tobacco in bulk. Ambiguity around how excise laws applied to unprocessed tobacco often resulted in disputes during auctions, billing issues, and unexpected tax demands. These problems frequently reduced farmers’ earnings and created uncertainty in the supply chain. The new clarification ensures that unbranded raw tobacco will no longer attract excise duty.

Andhra Pradesh Chief Minister N Chandrababu Naidu welcomed the move, stating that it would directly benefit farmers, traders, and exporters in the state. He noted that tobacco growers usually sell their produce in large bundles or sacks, which now clearly fall under the zero-duty category. This is expected to help farmers secure fair prices and avoid unnecessary disputes with tax authorities.

The policy also aims to bring uniformity and transparency to the taxation system. While unbranded bulk tobacco will now be exempt, branded tobacco products sold in retail packaging will continue to attract the applicable excise duty. This distinction seeks to protect small producers while ensuring that commercial tobacco products remain regulated.

Farmers in tobacco-growing regions have responded positively, expressing hope that predictable tax rules will encourage smoother auctions and more stable market conditions. Traders have also welcomed the decision, saying it reduces uncertainty and simplifies business operations. Over time, the revised excise structure is expected to strengthen the tobacco trade while supporting the livelihoods of thousands dependent on the crop.