Cigarette advertising will also be hit, with a widespread prohibition covering public transport, film, magazines and newspapers, informs Report citing BBC News.
There are an estimated 300 million smokers in China.
Previous attempts to ban the habit have ended in failure.
The rules, due to be enforced from June next year, will initially only cover the capital.
But they could be rolled out across the rest of the country of 1.3 billion people.
Under the proposals, smoking will not be allowed on the bus, at work or even outside near schools or hospitals.
The BBC's Michael Bristow said the plans could save some of the million or so Chinese who die of smoking-related illnesses each year.
But previous bans have been ignored, he added.
Ministry of Health guidelines published in 2011 banned smoking in public spaces such as hotels and restaurants.
The rules were vague, however, and often flouted by Chinese smokers who are accustomed to lighting up at will.