Blow to addicts, blow to companies! Cigarettes, Vidi and Pan Masala are expensive! Price increase will be from ‘this’ date

By Samira Vishwas On Jan 2, 2026

Cigarettes, Vidi and Pan Masala will be expensive!
New Tax and Cess will be applicable from ‘this’ date
Impact directly on the consumer’s pocket

Central Govt It has given a big shock to cigarette smokers and pan masala users. From 1st February 2026 Govt on tobacco products It has been decided to impose excise duty. An official order has been issued in this regard. In December 2025, the Central Government approved a new law called “Central Excise (Amendment) Bill 2025”. Excise duty will range from ₹2,050 to ₹8,500 per thousand sticks depending on the length of the product. This charge will be additional to the existing tax structure. The government aims to further tighten the tax system on tobacco products.

The Finance Ministry on Wednesday (December 31) notified a major revision in excise duty on cigarettes and tobacco products, effective February 1, 2026.
According to the notification issued, the government has imposed an additional excise duty on cigarettes in the range of Rs… pic.twitter.com/oLmbdz7D0o
— ANI (@ANI) January 1, 2026

Impact directly on the consumer’s pocket

After this decision, the price of cigarettes is expected to increase, which will directly affect the pocket of the consumers. The government’s aim is not only to raise revenue but also to discourage the use of tobacco products and take stringent measures regarding public health. According to sources, the duty and cess will be fixed according to the production capacity of the machinery used for production. This means that the tax rate will be fixed according to the production capacity.

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40% GST tax on cigarettes

As per the notification, the new tax on tobacco and paan masala will be in addition to the applicable GST rates. These new provisions will replace the existing GST compensatory cess, which is currently levied at different rates on ‘sin products’. From February 1, paan masala, cigarettes, tobacco and other related products will be taxed at 40% under GST, while bidis will be taxed at 18%.

Shares of tobacco companies fell

As soon as the news broke, shares of cigarette makers sold off sharply. Shares of market leader ITC, maker of brands like ‘Gold Flake’ and ‘Classic’, fell 8.62% to Rs 368 from Rs 402. Shares of Godfrey Phillips India, which sells Marlboro cigarettes, also fell 12%. The FMCG index also reflected this, falling over 3%.

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