Cigarettes and pan masala will become more expensive from February 1, 2026, as the government introduces a sweeping overhaul of excise duties.
The Finance Ministry announced fresh levies under the Central Excise Act and the Central Excise (Amendment) Act, 2025, marking the first major reset of tobacco taxation since GST rolled out in 2017.
Under the revised structure, cigarettes attract excise duties ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on their length and whether they are filtered. These duties apply in addition to GST of up to 40%, which significantly raises retail prices. Consequently, longer and filter cigarettes face the sharpest hikes as manufacturers pass on higher costs to consumers.
Moreover, smokeless tobacco products such as chewing tobacco, jarda, and gutkha also become costlier. The government introduced a machine-capacity-based excise system under the new Packing Machines Rules, 2026. The levy depends on the number of machines installed, their speed, output, and the retail price of pouches. Officials explained that this system aims to curb tax evasion in highly mechanised segments of the tobacco industry.
Additionally, the Finance Ministry stated that the revised tax framework aligns India with global public-health recommendations. These recommendations call for regular increases in excise duties to prevent tobacco products from becoming more affordable as incomes rise. Rising tobacco-related illnesses, particularly cancer, continue to strain India’s healthcare system.
According to CNBC-TV18, cigarette prices are expected to rise by 20–30%. For cigarettes up to 65 mm, duties range between Rs 2,700 and Rs 3,000 per 1,000 sticks. Cigarettes between 70 mm and 75 mm face duties of around Rs 7,000 per 1,000 sticks, while the “other” category attracts the highest levy of Rs 11,000 per 1,000 sticks.
In simple terms, the longer the cigarette, the higher the tax burden.
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