Cigarette Prices: An additional excise duty on cigarettes and tobacco products, along with a health cess on pan masala, will come into force from February 1. The new levies will be imposed over and above the highest Goods and Services Tax (GST) slab of 40%, replacing the existing regime of 28% GST plus compensation cess that has been in place since the rollout of GST on July 1, 2017.
Central Excise Act Amended: Per-Stick Duty Introduced for Cigarettes
With effect from February 1, amendments to the Central Excise Act introduce a length-based excise duty structure for cigarettes, with rates ranging from ₹2.05 to ₹8.50 per stick.
The revised structure differentiates between cigarette types based on filter use and length, significantly altering the tax burden across categories.
Cigarette-Wise Additional Excise Duty (Over and Above 40% GST)
Short non-filter cigarettes (up to 65 mm): ₹2.05 per stick
Short filter cigarettes (up to 65 mm): ₹2.10 per stick
Medium-length cigarettes (65–70 mm): ₹3.6 to ₹4 per stick
Long, premium cigarettes (70–75 mm): ₹5.4 per stick
The highest excise duty of ₹8.50 per stick applies only to unusual or non-standard cigarette designs. Most popular and widely sold cigarette brands do not fall under this top slab.
Why Are Cigarettes Getting Costlier?
Under the Health and National Security Cess Act, a cess will be levied on pan masala manufacturing units based on their production capacity.
Despite the new cess, the overall tax incidence on pan masala will remain unchanged at 88%, after factoring in the 40% GST.
Revised Duty Structure for Chewing Tobacco Products
The new framework also specifies excise duty rates for other tobacco products:
Chewing tobacco: 82% excise duty
Jarda-scented tobacco and gutkha: 91% excise duty
Pan masala manufacturers will be required to apply for a new registration under the Health and National Security Cess Law starting February 1.
Zubair Amin is a Senior Journalist at NewsX with over seven years of experience in reporting and editorial work. He has written for leading national and international publications, including Foreign Policy Magazine, Al Jazeera, The Economic Times, The Indian Express, The Wire, Article 14, Mongabay, News9, among others. His primary focus is on international affairs, with a strong interest in US politics and policy. He also writes on West Asia, Indian polity, and constitutional issues. Zubair tweets at zubaiyr.amin
