How much will your cigarette cost from Feb 1? Beedi, pan masala to get costlier as Centre imposes new excise duty, cess

The Indian government's Ministry of Finance has notified a major revision in excise duty on cigarettes and tobacco products, effective February 1, 2026. According to the notification issued on Wednesday (Dec 31), the government has imposed additional excise duty on cigarettes in the range of Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on the length and type of the product. After this, cigarettes and other tobacco products are set to become significantly more expensive from February 1, 2026. The duty will be levied over and above the existing 40 per cent Goods and Services Tax (GST) on tobacco and similar product.

This duty raise comes after the Parliament passed a Bill aimed at increasing excise duty on tobacco products and their manufacturing. The higher duties is expected to translate into sharp price increases, particularly for longer and filter cigarettes, as manufacturers pass on the additional tax costs to consumers. The basic excise duty on cigarettes had remained unchanged for nearly seven years.

The Central Excise (Amendment) Bill, 2025, passed by the Parliament, aimed at revising excise duties on tobacco and related products after the expiry of the GST compensation cess. Finance Minister Nirmala Sitharaman had said that the revenue collected will go to the divisible pool, and will be redistributed again (at the 41%) with the States. "Many members here made the comment that this is a cess. Excise is not a cess. Excise duty existed before GST. Compensation cess is reverting back to the Centre to be collected as Excise duty, which will be redistributed to the States at the 41% allocated," she had said in the parliament.

Meanwhile, prices of smokeless tobacco products are also expected to rise following the introduction of a machine-capacity-based excise levy. Chewing tobacco, jarda scented tobacco and gutkha will now be taxed based on the number, speed and output capacity of packing machines, as well as the retail sale price of the product, under the newly notified Packing Machines Rules, 2026. All changes will come into effect from February 1, 2026, giving manufacturers and distributors a limited transition period to recalibrate prices, update compliance systems and adjust production plans ahead of the expected price hikes.

What exactly will your cigarette cost?

In simple terms, once the new tax rules come into effect, a cigarette will become costlier due to higher taxes. With GST fixed at 40 per cent, the price of a cigarette that earlier cost ₹18 would first rise to around ₹19.70. On top of this, the government will levy an additional excise duty. Even if this excise duty is kept modest, at about ₹1–₹2 per cigarette, the final retail price would increase further. As a result, one cigarette is likely to cost roughly between ₹21 and ₹22 after February 1.

• GST: 40 per cent
• Additional excise duty (exact rate not notified yet)
• Adding a modest excise duty (typical range ₹1–₹2 per stick)
• ₹19.70 + ₹1.50 (average excise)= ₹21–₹22 per cigarette