Cigarette Price: Today brings some harsh news for smokers. The central government has tightened tobacco control in the country by imposing a new excise duty on cigarettes and tobacco, resulting in the largest price increase in the last seven years. This move aligns with World Health Organization (WHO) standards, which require taxes on tobacco products to be at least 75% of the retail price. Under the new rules, not only GST but also additional taxes based on the length of the cigarette will be levied.
What changed from February 1st
The government has completely overhauled the old tax structure on tobacco products. Previously, cigarettes were subject to a 28% GST and a compensation cess. However, the compensation cess has been removed and replaced with a new and more effective Health and National Security Cess.
A maximum of 40% GST, plus additional excise duty (depending on the length of the stick), plus related cess. This change will directly impact your pocket, as you’ll now have to pay more for each puff than before. The government’s clear message is that it prioritizes public health safety over revenue generation.
Cigarette Prices Increased by Length
This time, the government has determined tax slabs based on cigarette length and filter type. The information below can help you understand the additional burden of smoking cigarettes. Short cigarettes (up to 65 mm) without a filter have been taxed at approximately ₹2.05 per stick. Cigarettes with a filter (up to 65 mm) will see an additional tax increase of ₹2.10 per stick.
Standard cigarettes (65 to 70 mm) will see an increase of ₹3.60 to ₹4.00 per stick. This tax on premium or long cigarettes (70 to 75 mm) has reached approximately ₹5.40 per stick. Some special or non-standard cigarettes could see a maximum increase of ₹8.50. This means that consumers will now have to spend ₹20 to ₹50 more on a pack of 10 cigarettes.
Government tightens its grip on paan masala, khaini, and gutkha
The government has tightened its grip not only on cigarettes but also on chewing tobacco products. Taxes on khaini, zarda, and gutkha will now be levied based on MRP (retail price) instead of manufacturing cost. This will eliminate the scope for companies to evade taxes by understating prices.
The total tax burden (including GST) on gutkha has now increased to 91%, while on paan masala it will be 88%, and on tobacco containing zarda it will be 82%. The government has ensured that the entire tax is levied based on the price printed on the package, which will significantly increase the prices of these products in the market.
Cigarette Consumption May Decline
According to a report (Crisil Ratings), this significant increase in taxes could lead to a 6 to 8 percent decline in sales for the domestic cigarette industry in the next financial year. However, experts warn that higher taxes could increase illegal cigarette smuggling. However, the government believes higher prices will help keep younger generations away from tobacco and curb the risk of diseases like cancer.