Quit smoking or pay more! Cigarette prices witness MASSIVE surge as government imposes additional excise duty on tobacco products

New Delhi: Finance Minister Nirmala Sitharaman on Sunday presented Union Budget 2026, her ninth consecutive under Prime Minister Narendra Modi. During her address, the Finance Minister announced a major change in the taxation of cigarettes, tobacco products, and pan masala. Under the new system, an additional excise duty and a health and national security cess now apply on these products, on top of the existing GST. It is important to note that this move aims to tighten regulation and discourage consumption of harmful products, while also boosting public health and revenue collection.

Notably, cigarettes, tobacco products, and pan masala will now attract GST at the highest applicable level (40 percent) — higher than the previous 28 percent rate — as per new guidelines. The government has decided to replace the compensation cess previously charged since the launch of GST in 2017. An additional excise duty applies to cigarettes and tobacco products. A new Health and National Security Cess now applies specifically to pan masala manufacturers. These changes mark a shift from the earlier tax model, where products were taxed at 28% GST plus a compensation cess.

Here are some of the key details:

• Effective date: February 1, 2026
• The higher excise applies to cigarettes and tobacco products
• Health and National Security Cess applies to pan masala
• MRP-based GST: GST will now be based on retail price, reducing undervaluation
• Compliance norms: More stringent regulations for pan masala units
• Short non-filter cigarettes (up to 65 mm) attract an additional excise of approximately Rs 2.05 per stick.
• Short filter cigarettes of the same length have about Rs 2.10 duty per stick.
• Medium-length cigarettes cost around Rs 3.6–4 per stick, and longer variants about Rs 5.4 per stick.
• Some non-standard or premium designs may attract the highest levies up to Rs 8.50 per stick.

A packet of Wills Navy Cut (76 mm), earlier priced at Rs 95 per pack of 10 sticks, is expected to cost around Rs 120 per pack, according to news agency PTI. Cigarettes of 84 mm length—such as Gold Flake Kings and Lights, Wills Classic and Wills Classic Milds—currently priced at Rs 170 per pack of 10 sticks, are expected to cost between Rs 220 and Rs 225 per pack.

Similarly, slim cigarettes such as Classic Connect (97 mm), priced at Rs 300 for a pack of 20 sticks, are expected to have an MRP of around Rs 350, the report said. However, distributors fear that the price hikes could lead to increased smuggling and the spread of counterfeit products. According to the All India(BHARAT) Cigarette and Tobacco Distributors Federation (AICPDF), there are around 8,000–9,000 stockists of cigarettes and tobacco products across the country.

NOTE: SMOKING IS INJURIOUS TO HELP AND INDIA.COM DOES NOT SUPPORT CIGARETTE SMOKING