Government As part of the change in tax structure, the government has decided to impose additional excise duty on cigarettes and other tobacco products from February 1, due to which a cigarette will become costlier by Rs 2.05 to Rs 8.50. Under the new rules, the maximum tax has been increased on long and premium cigarettes. Notifying the amendment in the Central Excise Act, the Finance Ministry has fixed the excise duty ranging from Rs 2050 to Rs 8500 per 1000 cigarettes, depending on the length of the cigarette. This tax will be different from the 40 percent GST already applicable on these products.
New tax system will be implemented on tobacco products from February 1, 2026
The new tax system will come into effect from February 1, 2026. The ministry has also notified the Health and National Security Cess Act, under which a cess will be levied on the manufacturing capacity of pan masala-related businesses. Considering 40 percent GST on Pan Masala, the total tax load has been maintained at 88 percent. The new tax structure will replace the existing system of 28 percent GST and compensation cess applicable on tobacco products.
How much will the price of which cigarette increase?
Under the new rules, small non-filter cigarettes up to 65 mm will attract an extra tax of about Rs 2.05 per stick, while small filter cigarettes up to 65 mm will attract an additional tax of about Rs 2.10 per stick. Similarly, additional excise duty of Rs 3.60 to Rs 4.00 per stick will be imposed on cigarettes of length 65 to 70 mm and additional excise duty of around Rs 5.40 per stick on premium cigarettes of length 70 to 75 mm. Tax on cigarettes of unusual or non-standard design falling in the ‘other’ category has been fixed at Rs 8.50 per stick. However, most popular brands of cigarettes do not fall into this category.
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