Cigarette smokers will soon have to dig deeper into their pockets. From February 1, cigarette prices are set to rise following the government’s decision to impose an additional excise duty under a revised tobacco tax structure.
The finance ministry has notified amendments to the Central Excise Act, introducing an extra excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on the length and category of cigarettes.
This duty will be levied over and above the new 40% GST on tobacco products, making each cigarette noticeably more expensive at the retail level.
In per-stick terms, the price increase will be most visible in medium-length and premium cigarettes.
How Much More Will You Pay for Cigarettes From February 1?
Here’s a category-wise breakup of the additional excise duty, converted into per-stick impact:
Short non-filter cigarettes (up to 65 mm):
Around Rs 2.05 per stick
Short filter cigarettes (up to 65 mm):
Around Rs 2.10 per stick
Medium-length cigarettes (65–70 mm):
Around Rs 3.6 to Rs 4 per stick
Long or premium cigarettes (70–75 mm):
Around Rs 5.4 per stick
“Other” non-standard cigarette designs:
Around Rs 8.5 per stick
This category applies only to unusual designs; most popular brands do not fall under it
What About Other Tobacco Products?
From February 1, the revised tax regime will apply across tobacco categories:
Cigarettes and pan masala: 40% GST
Biris: 18% GST
Chewing tobacco and jarda scented tobacco: 82% excise duty
Gutkha: 91% excise duty
After factoring in GST, the total tax incidence on pan masala will remain unchanged at 88%.
What Has Changed in the Tax Structure?
Currently, tobacco products attract 28% GST along with a compensation cess. From February 1, this will shift to:
40% GST, plus
Excise duty on cigarettes, and
Cess on pan masala
This change follows a GST Council decision taken in September, after it was decided that the compensation cess would end once loans taken during the Covid-19 period are fully repaid. The Rs 2.69 lakh crore loan to compensate states is scheduled to be cleared by January 31, 2026.
Why the Government Raised Cigarette Taxes
Officials say the hike is aimed at ensuring cigarettes carry a tax burden proportionate to their severe public health impact. Taxes on cigarettes in India have remained unchanged for nearly seven years since the rollout of GST in July 2017.
According to World Bank estimates, India’s total tax incidence on cigarettes is around 53% of the retail price—well below the World Health Organization’s recommended benchmark of at least 75%.
In comparison:
The UK and Australia tax cigarettes at over 80–85% of retail price
France, New Zealand, and several EU nations maintain tax levels of 75–80% or more
New Compliance Rules for Tobacco Makers
The new rules also tighten oversight on manufacturers of chewing tobacco, jarda scented tobacco and gutkha.
Companies will now be required to:
Install functional CCTV systems covering all packing machines
Preserve CCTV footage for at least 24 months
Disclose the number and capacity of packing machines to excise authorities
Manufacturers can claim excise duty abatement if a machine remains non-functional for at least 15 consecutive days.
With higher GST, additional excise duties and tighter compliance norms, the government’s latest move is expected to significantly raise cigarette prices while aligning India’s tobacco taxation closer to global public health standards.
