New Delhi, Jan 2: Cigarettes in India are set to become more expensive from February 1 after the Centre reinstated a separate excise duty on tobacco products, ending nearly eight years of taxation solely under the GST framework.
According to a finance ministry notification issued on December 31, the government has fixed a specific excise duty ranging between ₹2,050 and ₹8,500 per 1,000 cigarettes, with rates determined by the length of the cigarette and whether it is filtered or non-filtered. The levy will apply over and above the existing GST, reshaping the overall tax structure on cigarettes.
The move follows Parliament’s approval of the Central Excise (Amendment) Bill, 2025, which replaces a provisional levy with a permanent excise mechanism. This marks the first major overhaul of cigarette taxation since the introduction of GST in 2017.
Officials indicated that the revised duty structure is aimed at aligning India’s tobacco taxation more closely with public health objectives. At present, taxes account for about 53 per cent of cigarette retail prices, significantly lower than the World Health Organization’s recommended level of 75 per cent to curb tobacco consumption.
Under the new framework, longer cigarettes will attract higher taxes, meaning the price impact will depend more on cigarette size than on brand identity. Short non-filter cigarettes will face the lowest increase, while premium and king-size variants are expected to see the sharpest rise.
The higher duty is likely to affect nearly 100 million smokers nationwide, though the extent of the price increase will depend on how manufacturers pass on the additional tax burden. Industry players may absorb part of the hike for mass-market brands, while premium products could see quicker and fuller price revisions.
The announcement triggered a sharp reaction in equity markets, with tobacco stocks coming under pressure. Shares of ITC and Godfrey Phillips India declined sharply as investors weighed the potential impact of higher taxes on volumes and profitability.
With the reintroduction of excise duty, cigarette pricing in India is set to enter a new phase, reinforcing the government’s broader push to discourage tobacco use through fiscal measures.
