The Central Government has announced the imposition of excise duty on tobacco and tobacco products from February 1, 2026. If you smoke cigarettes, you may now have to pay more. This amount will depend not only on the brand of the cigarette but also on the length of the cigarette. This is the highest tax on cigarettes since the implementation of GST in 2017. In addition to 40% GST, excise tax will be levied on cigarettes, which will depend on the length of the cigarette and whether it has a filter or not. The longer the cigarette, the higher the tax rate.
What are the new tax rates?
As per tax rules, excise duty will be levied per 1,000 cigarettes from February 1. This amount will depend on the length of the cigarette.
The price of unfiltered cigarettes up to 65 mm in length will be ₹2,050 per thousand.
Unfiltered cigarettes of length more than 65 mm and up to 70 mm will be priced at ₹3,600 per thousand.
Filter cigarettes (including filter) of length up to 65 mm will be priced at ₹2,100 per thousand.
Filter cigarettes (including filter) of length more than 65 mm and up to 70 mm will be priced at ₹4,000 per thousand.
Filter cigarettes (including filter) of length more than 70 mm and up to 75 mm will be priced at ₹5,400 per thousand.
Other cigarettes will attract excise duty of up to ₹8,500 per thousand. Excise duty of ₹4,006 per thousand will be levied on tobacco substitute cigarettes. Similarly, tobacco substitute cigarettes will be taxed at 12.5% or ₹4,006 per thousand, whichever is higher. Other cigarettes will be taxed at 12.5% or ₹4,006 per thousand, whichever is higher.
How much will the price per cigarette increase?
As per excise duty, the price of small unfiltered cigarettes (up to 65 mm) will increase by ₹2.05. The price of small cigarettes with filters (up to 65 mm) will increase by ₹2.10. The price of 65-70 mm cigarettes will increase by ₹3 to ₹4. The price of premium cigarettes (70-75 mm) may increase by about ₹5.
Now how much will a ₹10 cigarette cost?
Experts say that this decision of the government may increase the prices of cigarettes by 20 to 50 percent. Small cigarettes may see a 20% increase, while medium cigarettes may see a 30% increase. Premium cigarettes may increase by 50%. As a result, the price of a Rs 10 cigarette may increase by Rs 2, making it available at Rs 12. A cigarette costing Rs 15 can be bought for Rs 18 or Rs 19. The price of a Rs 20 cigarette may increase between Rs 23 to Rs 25.
Which cigarettes will be most affected?
Companies can pass the entire burden of increase in excise duty on consumers, due to which consumers will have to pay more for their cigarettes. This increase may have the biggest impact on premium, long and flavored cigarettes. The government’s objective of imposing additional duty on cigarettes is to prevent tax evasion in the tobacco market and increase government revenue.