In a significant move to tighten oversight on the tobacco industry, the Government of India has announced stringent new excise regulations. Starting February 1, 2026, all tobacco product manufacturers will be required to install comprehensive CCTV surveillance systems at their production facilities.
Key Mandate: Surveillance and Data Retention
The central directive mandates that the closed-circuit television footage captured within these manufacturing units must be preserved and stored securely for a period of 24 months. This two-year data retention policy is designed to provide excise authorities with a reliable audit trail, enabling them to monitor production activities closely and prevent potential revenue leakages. The move is seen as a major step towards bringing greater transparency and accountability to the sector.
Clarity on Duty for Other Tobacco Forms
Alongside the surveillance order, the Ministry of Finance has released a detailed FAQ to clarify the excise duty framework. A crucial point addressed is the taxation of tobacco products manufactured in forms other than traditional cigarettes or bidis. The ministry explicitly stated that those manufacturing in other forms (such as tins) have to pay the applicable duty on the assessable value of the goods. This clarification aims to standardize the tax application across all tobacco product categories and close any ambiguous loopholes.
Implications for the Industry and Enforcement
The new rules, announced on January 1, 2026, will have profound implications for tobacco companies. They will need to invest in compliant surveillance infrastructure and establish robust data management systems to adhere to the 24-month storage rule. For the government, this enhances the tools available for excise duty verification and compliance checks. The policy underscores the administration's continued focus on strengthening fiscal governance and ensuring all taxable goods, especially in sensitive sectors like tobacco, contribute their fair share to the national exchequer.
Industry stakeholders are expected to review the detailed FAQs thoroughly to ensure full compliance before the February 1, 2026 deadline. Failure to install the required CCTV systems or preserve footage could lead to penalties and increased scrutiny from tax authorities.
