Cigarettes may become costlier by over 15%:Uncertainty still remains over how much cigarette prices will rise per stick, says expert

After the government of India has increased the taxes on cigarettes and other tobacco products, it has become a certainty that prices will rise. But! How by much the cigarettes will become costlier. It is still not clear. According to CA Deep Koradia, the government will notify the rates of new taxes later on. Only then, it will become clear as to by how much the cigarette prices will increase per stick. Separate cess will be levied via new bill ‘health security to national security cess bill’ and via ‘excise law’ – likely to be on production capacity – exact rates are yet to be notified. – CA Deep Koradia The government earlier notified 1 February, 2026 as the date from which additional excise duty on tobacco products, and a health cess on pan masala will be levied, replacing the existing GST compensation cess levy on such sin goods . These new taxes will be on top of the Goods and Services Tax (GST) of 40%. While, biris will attract 18% GST. By how much will cigarette prices rise? According to international brokerage firm Jefferies, the new tax structure could increase the total tax burden by 20% to 30%. In such a situation, companies may have to increase cigarette prices by at least 15% to pass the entire burden of the increase onto consumers. It may even have to be increased more than that. Why govt raised taxes on tobacco products? What are the new changes?
From Feb 1, 2025, GST will be levied effectively on MRP of the product considering MRP is inclusive of GST. – CA Deep Koradia An additional excise duty of 91% on gutkha, 82% on chewing tobacco, and 82% on jarda scented tobacco will be levied. Cigarettes, depending on length and filter, will be taxed in the range of ₹2,050-₹8,500 per 1,000 sticks. Govt reduced this tax to zero on cigarettes, others: The Centre has withdrawn the GST Compensation Cess on all tobacco products, reducing the cess rate to zero. Currently, a 28% GST and a compensation cess at varying rates are levied on all tobacco products, including pan masala, cigarettes, chewing tobacco, cigars, hookah, zarda, and scented tobacco.