The Indian government has decided to make smoking a more expensive habit, announcing a significant hike in excise duty on cigarettes. The new tax structure, which comes into effect on February 1, 2026, will see cigarette prices rise across the board, with premium, longer sticks attracting the steepest increases.
New Tax Structure: Longer Cigarettes, Higher Duty
The revised taxation policy introduces an additional excise duty on top of the existing 40% Goods and Services Tax (GST) applicable to cigarettes. The key determinant of the new cost is the length of the cigarette stick. The government has categorised cigarettes and set duties as follows:
- Short non-filter cigarettes (up to 65 mm): An additional duty of ₹2.05 per stick.
- Short filter cigarettes: An additional duty of ₹2.10 per stick.
- Medium-length cigarettes (65-70 mm): An additional duty ranging from ₹3.6 to ₹4 per stick.
- Long, premium cigarettes (70-75 mm): An additional duty of ₹5.4 per stick.
- An 'other' category: Carries a higher duty of ₹8,500 per 1,000 sticks.
This move ends a seven-year period of unchanged cigarette taxes since the GST regime was introduced in July 2017. According to a PTI report, this stagnation contrasts with global public health guidance that recommends annual duty hikes to ensure cigarette prices outpace income growth.
What Will Your Favorite Brand Cost?
The principle is simple: the longer the cigarette, the costlier it becomes. Popular brands are now classified based on stick length, giving consumers a clear idea of the impending price shock.
Long Cigarettes (King Size, ~84 mm): This category, which will see the highest price jump, includes brands like Gold Flake Kings, Wills Classic/Classic Milds King Size, Benson & Hedges (Kings), Marlboro (Gold/Red/Kings), and Four Square King Size.
Medium-length Cigarettes (~65-70 mm): Brands in this segment include Wills Navy Cut Filter (regular), Gold Flake Regular (69 mm variant), and filtered sticks from ITC and Godfrey Phillips.
Short Cigarettes: This segment covers smaller sticks like Charminar and similar local non-filter brands, mini variants from major companies, and unfiltered local cigarettes commonly sold at pan shops.
Broader Impact on Tobacco Products
The tax revision is not limited to cigarettes. The government has also notified the Health and National Security Cess Act, which levies a cess on the manufacturing capacity of pan masala businesses from the same date, February 1, 2026.
The total tax incidence on pan masala, after including the 40% GST, will be maintained at the current level of 88%. Furthermore, chewing and jarda scented tobacco will attract an excise duty of 82%, while gutkha will be taxed at 91%. Bidis (rolled tobacco leaves) will continue to be taxed at a lower GST rate of 18%.
This tax hike aligns with public health objectives, though India's total tax incidence on cigarettes, estimated by the World Bank at around 53% of the retail price, still falls short of the World Health Organization's recommended benchmark of 75% or more for effectively reducing tobacco consumption.
The government's latest move is set to make smokers pay significantly more for their habit, aiming to curb consumption while boosting revenue. Consumers will feel the pinch directly from the start of next month as the new duties take effect.
