No Price Hike Tomorrow: Will Cigarettes And Alcohol Get Expensive Under Sin Tax As New GST Is Implemented From Tomorrow?

Will There Be High Prices on Cigarettes and Alcohol Tomorrow?

Are you worried that you’ll have to rush to the store tonight to buy cigarettes or liquor because tomorrow is September 22, 2025? Don’t worry, there is no price increase tomorrow.

Here’s the deal: the GST Council has approved a new 40% sin tax on items such as tobacco and liquor. Sounds heavy, right? But don’t panic just yet. That change is not coming into effect immediately. For now, the existing system remains: 28% GST plus an additional compensation cess.

So, Why is the delay happening?
The government still needs to settle its dues to the states under the older GST structure. Your cigarettes and alcohol will cost the same until that is completed, likely by the end of 2025.

No surprises at the counter tomorrow, then. However, remember that once the new tax is implemented, prices will inevitably rise. 

Why Prices Of Cigarettes And Alcohol Will Not Rise Tomorrow

Even though the 40 percent GST rate is dramatic, the current tax system for cigarettes is not going to change tomorrow. Here’s why:

• Tax Change Deferred: The Council has indicated that the new GST slabs for sin goods will not be implemented at once. Rather, the current framework will be maintained until some of the financial obligations of the government are met.
• Compensation Cess Still in Effect: At present, cigarettes are subject to 28 percent GST plus a compensation cess, differentiated by the length and type of cigarette. This cess is being collected to assist the central government in compensating states that lost revenue following the initial GST implementation in 2017.
• Timeline to Phase Out Compensation: The government has suggested that payment routines will continue until 2025, or until every state is fully compensated. It is only after this that the old system will be replaced by the 40% flat GST on cigarettes.

Health and Policy: The Bigger Picture Of Implementing Sin Tax

Increasing tax on cigarettes is not only about fattening the government coffers, but it is also a witty, health-wise decision. Non-communicable diseases are contributed to by smoking and tobacco use, and high taxes have long been applied to make people think twice before lighting up.

Increased tobacco taxes have been noted to work around the globe, particularly in deterring youths who have just started the habit. The GST 2.0 reform in India is no different: harmful products are made more expensive so that fewer people can afford to purchase them. Thus, you may pinch your wallet in the future, but your health (and that of the country) will be the big winner in the long term.

(Disclaimer: This content is for informational purposes only and does not promote or encourage smoking, tobacco, or alcohol consumption. Always follow health guidelines and government regulations.)

Also Read: Sin Goods Stocks Slide As Government Plans 40% GST ‘Sin Tax’ Under New Reform; Tobacco And Gaming Sectors Under Pressure