Announcement of extra excise duty on tobacco products, cigarettes and pan masala will become more expensive.

By Samira Vishwas On Jan 1, 2026

Cigarette Price Hike: While 40 percent GST has been imposed on cigarettes and pan masala, 18 percent tax has also been imposed on beedis.

Cigarette prices will increase from February 1

Cigarette Price Hike: Cigarettes and tobacco will become more expensive now, because the Central Government has once again announced to impose extra excise duty on these products. The Finance Ministry notified this on the last day of the year i.e. 31 December 2025, according to which it will be implemented across the country from 1 February 2026. Immediately after this order, today the shares of tobacco related companies fell drastically. ITC declined by 8.62 percent, Godfrey Phillips India declined by 12 percent and FMCG index also recorded a decline of 3 percent.

According to this rule of the Finance Ministry, depending on the length of the cigarette, excise duty ranging from Rs 2050 to Rs 8500 will be imposed on every 1 thousand sticks. Not only this, 40 percent GST will be imposed separately on it, after which the price may double. That is, the government has decided that the tax on tobacco products should be increased further. This news is disappointing for those who consume pan masala and tobacco.

40 percent GST on cigarettes

The Central Government has imposed a tax of 40 percent on the producers on whom compensation cess was already imposed. He will be eliminated. Now a new cess will be implemented in its place. ‘Health and National Security Cess’ and ‘Additional Excise Duty’ will be applicable from 1 February 2026. This bill has been approved by the Central Government and has also been passed in the Parliament.

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18 percent tax will have to be paid on beedis also

While 40 percent GST has been imposed on cigarettes and pan masala, 18 percent tax has also been imposed on beedis. The government has taken this decision to prevent tax evasion. The government will collect cess on the basis of the capacity of the machines. At present, there will be no change in the rate for 1 month i.e. till 31st January.