Even before Finance Minister Nirmala Sitharaman unveiled Budget 2026, the price of cigarettes, pan masala and tobacco products has increased, as new excise duties and a health cess kick in from today (February 1)
Your smoke breaks are set to get more expensive, starting today (February 1).
Even before Finance Minister Nirmala Sitharaman announces the Budget today, the price of cigarettes, pan masala, and other tobacco products will rise as an additional excise duty and a health cess kicks in.
The cess and excise levies will replace the existing 28 per cent Goods and Services Tax (GST), plus compensation cess, on such
‘sin goods’ which was there on these items since GST was rolled out on July 1, 2017.
- Starting today (February 1), an additional excise duty on cigarettes and tobacco products, and a health cess on pan masala, over and above the highest 40 per cent GST rate, will come into effect.
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Also, from February 1, a new MRP-based valuation mechanism will be introduced for tobacco products (chewing tobacco, filter khaini, jarda scented tobacco, gutkha) whereby GST shall be determined based on retail sale price declared on the package.
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As a result of these changes, short non-filter cigarettes up to 65 mm will attract an additional duty of about Rs 2.05 per stick, while short filter cigarettes of the same length will be charged around Rs2.10. Medium-length cigarettes of 65–70 mm will face duties of about Rs 3.6–R4 per stick, and longer premium cigarettes of 70–75 mm about Rs 5.4. The highest rate of Rs 8.50 per stick applies only to non-standard cigarette designs.
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Chewing tobacco will also attract an excise duty of 82 per cent, while gutkha will be taxed at 91 per cent.
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Earlier in December, Finance Minister Nirmala Sitharaman said that the health cess would create a “dedicated and predictable revenue stream” to support expenditure on public health and national security.
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According to a Crisil Ratings report, the domestic cigarette industry is preparing for a six-eight per cent volume reduction in the next fiscal year owing to the imposition of the additional excise duties.
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However, despite the projected volume decline, the industry’s financial health is expected to remain stable.
With inputs from agencies
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