New Delhi: In a late-night notification before the new year, the Ministry of Finance has announced a significant increase in taxes on tobacco products, making them dearer by 28%. This new duty is expected to be implemented by February 1, in addition to the existing 40% GST already levied.
The move forms another push by the government to discourage tobacco consumption, with cigarettes longer than 75mm seeing the most impact.
Currently, taxes on cigarettes amount for about 53% of retail prices, well below the World Health Organization’s benchmark of 75% aimed at discouraging consumption. Public health activists have welcomed the move, as this action is expected to discourage the consumption of tobacco, a cause of millions of preventable illnesses every year.
However, these prices could result in higher smuggling of cigarettes from abroad. Besides this the Ministry also notified the Chewing Tobacco, Jarda Scented Tobacco and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026.
For manufacturers, this could mean an excise duty of about ₹2,050-₹8,500 per thousand sticks. The rise in tobacco prices came earlier this year, as such announcements are typically notified during the yearly budget sessions. There was no increase on taxes on tobacco in the previous FY2024-25 budget.
