Government of India (GoI) Implements New Excise Duty and Health Cess on Tobacco Products

Key facts

• The Government of India (GoI) has imposed an additional excise duty on cigarettes and tobacco products along with a health cess on pan masala effective from 1 February.
• The new tax framework replaces the previous structure of 28 per cent Goods and Services Tax (GST) plus compensation cess with a 40 per cent GST regime.
• The GST Council approved these levies following the repayment of a ₹2.69 lakh crore loan taken to offset state revenue losses, which was scheduled for completion by 31 January 2026.
• Non-filter cigarettes up to 65 mm in length attract an additional levy of approximately ₹2.05 per stick, while filter cigarettes of the same size are charged roughly ₹2.10 per stick.
• Cigarettes in the 65–70 mm category face an extra duty of around ₹3.6–4 per stick, while premium cigarettes measuring 70–75 mm are taxed at approximately ₹5.4 per stick.
• The highest levy of ₹8.50 per stick applies to non-standard or atypical cigarette designs, while retail prices for a pack of 10 sticks have increased by at least ₹22–25.
• Cigarettes measuring 76 mm in length are set to become costlier by ₹50–55 per pack, with brands in the 84 mm segment likely to be re-tagged at ₹220–225 from the previous ₹170.
• The All India Consumer Products Distributors Federation (AICPDF) reports that India has an estimated 8,000–9,000 cigarette and tobacco stockists.