New Delhi, January 1, 2026: The Centre has announced a fresh excise duty on cigarettes, a move that is set to increase retail prices from February 1 and impact smokers nationwide. An order issued by the finance ministry said the revised duty will be imposed based on the length of cigarettes, ranging between ₹2,050 and ₹8,500 per 1,000 sticks, in addition to the existing 40 per cent Goods and Services Tax.
The new levy comes at a time when the overall tax burden on cigarettes in India is estimated at about 53 per cent, well below the 75 per cent level recommended by the World Health Organization. Officials said the revised structure is aimed at narrowing this gap and strengthening public health measures by discouraging tobacco consumption.
The decision follows the passage of the Central Excise Amendment Bill, 2025, which was cleared by Parliament in December. The amendment removed the temporary excise mechanism on cigarettes and tobacco products and replaced it with a permanent taxation framework, under which the latest duty has now been notified.
Government officials indicated that the higher excise burden is expected to translate into increased prices for consumers, potentially affecting smoking habits over time. The move is also likely to have an impact on cigarette manufacturers, including major players such as ITC and Godfrey Phillips India, with possible implications for sales volumes and margins.
The Centre has consistently argued that higher taxation remains one of the most effective tools to curb tobacco use and reduce health risks associated with smoking. Authorities believe the revised excise duty will contribute to long-term public health objectives while also boosting government revenue.
