Classic, Gold Flake Or Marlboro: Cigarettes To Get Costlier From February 1 As New Excise Duty Kicks In
Classic, Gold Flake Or Marlboro: Cigarettes To Get Costlier From February 1 As New Excise Duty Kicks In
Longer and premium cigarette sticks will face the sharpest price hikes as the Centre reintroduces a size-based excise duty from February 1, 2026.
From February 1, 2026, cigarette prices across India are set to rise as the central government brings back a separate excise duty on tobacco products, over and above Goods and Services Tax (GST). The move marks a significant shift in how cigarettes are taxed and is expected to directly impact nearly 10 crore smokers, especially those who prefer longer and premium variants.
Under the new structure, excise duty will be charged per 1,000 sticks and will vary based on the length of the cigarette and whether it is filtered or non-filtered. Simply put, the longer the cigarette, the higher the tax—and the steeper the price increase at the counter.
According to the notification issued by the finance ministry, excise duty will range from ₹2,050 to ₹8,500 per 1,000 cigarettes, depending on the category. King-size and premium cigarettes, including popular variants such as Classic, Gold Flake Premium and Marlboro, fall into higher slabs due to their longer stick length. Industry estimates suggest this could translate into an increase of ₹5 to ₹5.5 per cigarette for some premium brands.
Shorter cigarettes, mini sticks and stubby non-filter variants are likely to see smaller hikes in comparison. While manufacturers may absorb part of the increase for mass-market products to protect volumes, analysts believe most of the additional tax burden on premium cigarettes will be passed on to consumers upfront.
The new excise duty comes on top of GST, which has been rationalised to either 18% or 40% depending on the product category. At the same time, the government has withdrawn the GST compensation cess on tobacco. Even after these changes, total taxes on cigarettes in India will account for roughly 53% of the retail price—still below the World Health Organization’s recommended benchmark of 75% aimed at discouraging smoking.
Market reaction to the announcement was swift. Shares of major tobacco companies came under pressure, with ITC sliding nearly 10% in early trade, while Godfrey Phillips India dropped over 15% on the BSE. Analysts at Jefferies noted that ITC may need to hike cigarette prices by at least 15% to fully pass on the impact of the new excise duty. Cigarettes contribute more than 40% of ITC’s overall revenue, making pricing decisions critical for the company.
The government has said the move is intended to curb tax evasion in the tobacco sector, boost revenue, and align India’s tobacco taxation more closely with global public health recommendations. Officials have also pointed to rising healthcare costs linked to tobacco-related illnesses, particularly cancer, as a key reason for raising duties now.
All changes will come into effect from February 1, 2026. Manufacturers have been given a short transition window to update compliance systems, adjust prices, and rework production plans. For smokers, the takeaway is clear: from February, cigarette bills will almost certainly rise, and the size of the stick will matter more than ever.
Disclaimer: Smoking and tobacco consumption are injurious to health.
