Cigarette Price Hike: The government has removed the GST compensation cess on tobacco, but the total tax burden still represents approximately 53 percent of retail prices. This is below the World Health Organization’s recommended benchmark of 75 percent for effective tobacco control. The Finance Ministry has stated that the revised tax structure aims to curb tax evasion, increase revenue, and align India’s tobacco taxation with global public-health norms.
The government has announced the reintroduction of a special central excise duty on cigarettes, in addition to the Goods and Services Tax ( GST ), effective February 1, 2026. This new tax is expected to significantly increase cigarette prices. A major change in the way tobacco products are taxed this time is that, for the first time, the excise duty is directly linked to the length and type of cigarette.
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Under the new system, excise duty will be levied per 1,000 sticks, with the rate depending on whether the cigarettes are filtered or filterless and their size. Let’s find out how much the new tax system is expected to increase prices. Cigarettes with a length less than 65 mm without a filter: Rs 2,050 for 1,000 sticks (Rs 2.05 per stick). This means an increase of Rs 20.50 for a pack of 10.
Cigarettes with a filter diameter less than 65 mm: Rs 2,100 for 1,000 sticks (Rs 2.10 per cigarette). This means an increase of Rs 20.10 for a pack of 10.
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Cigarettes with a 65-70 mm filter: Rs 3,600–Rs 4,000 for 1,000 sticks (Rs 3.60–Rs 4 per stick). A Rs 40 increase is possible for a pack of 10 cigarettes. Cigarettes with a 70–75 mm filter: Ra 5,400 for 1,000 sticks (Rs 5.40 per stick). If the pack contains 10 cigarettes, the increase could be Rs 54.
Premium or long cigarettes over 75 mm: Up to Rs 8,500 for 1,000 sticks (Rs 8.50+ per stick). For a pack of 10 cigarettes, the increase could be Rs 85 per pack.
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Very low excise duty till now
For comparison, in the post-GST system implemented in 2017, excise duty was mostly nominal, at Rs 5 per 1,000 sticks for most categories and Rs 10 for cigarettes longer than 75 mm. The new tax structure will result in a smaller increase in the prices of smaller, commonly sold cigarettes, while longer and premium cigarettes are likely to see the full impact of the tax increase. Retail prices will now depend not only on the brand, but also on the length of the cigarette.