New Delhi — The central government has decided to impose a new excise duty on cigarettes starting February 1, a move that is expected to push up retail prices and impact millions of smokers across the country. According to an order issued by the finance ministry, the revised excise duty will be levied based on cigarette length, ranging from ₹2,050 to ₹8,500 per 1,000 sticks, over and above the existing 40 per cent Goods and Services Tax.
At present, the total tax incidence on cigarettes in India stands at around 53 per cent, significantly lower than the 75 per cent benchmark recommended by the World Health Organization. The government believes the new duty will help bridge this gap and act as a deterrent against tobacco consumption, while also strengthening public health safeguards.
The decision follows the approval of the Central Excise Amendment Bill, 2025, in December last year, which abolished the temporary levy on cigarettes and tobacco products and replaced it with a permanent taxation framework. The newly announced excise duty is being implemented under the provisions of this amended law.
Officials said the higher tax burden is likely to lead to an increase in cigarette prices, directly affecting a large number of consumers. The move could also put pressure on cigarette manufacturers such as ITC and Godfrey Phillips India, with potential implications for their sales volumes and profitability.
The government has maintained that higher taxation is a key policy tool to reduce tobacco use and curb tobacco-related health risks. Authorities expect the revised excise structure to discourage consumption over time and contribute to improved public health outcomes.
