Cigarettes are set to become more expensive from February 1, 2026, as the government introduces a revamped central excise duty on tobacco products. The new tax framework marks a significant shift in cigarette taxation, linking excise duty directly to the length and type of cigarette. Premium and longer cigarettes will face the steepest tax hike, while shorter and non-filter variants will see a comparatively lower increase.

This move is being seen as the most substantial revision in cigarette excise duty since the introduction of the Goods and Services Tax (GST) in 2017. After GST came into force, excise duty on cigarettes had largely become symbolic, with minimal fixed charges applied across most categories. The new decision reverses that approach and tightens the tobacco tax regime.

How the New Excise Duty Will Be Calculated

Under the revised system, excise duty will be charged per 1,000 cigarette sticks. The tax rate will vary based on whether the cigarette has a filter and its length in millimetres. This length-based classification is expected to play a key role in determining retail prices going forward.

According to the new structure:

• Non-filter cigarettes shorter than 65 mm will attract an excise duty of ₹2,050 per 1,000 sticks, translating to about ₹2.05 per cigarette.




• Filter cigarettes shorter than 65 mm will be taxed at ₹2,100 per 1,000 sticks, or ₹2.10 per cigarette.




• Filter cigarettes measuring between 65 mm and 70 mm will face excise duty ranging from ₹3,600 to ₹4,000 per 1,000 sticks, or ₹3.60 to ₹4 per cigarette.




• Cigarettes between 70 mm and 75 mm in length will attract a duty of ₹5,400 per 1,000 sticks, or ₹5.40 per cigarette.




• Premium cigarettes longer than 75 mm will bear the highest burden, with excise duty going up to ₹8,500 per 1,000 sticks, or ₹8.50 or more per cigarette.

First Major Increase Since 2017

When GST was introduced in 2017, excise duty on cigarettes was sharply reduced. In most categories, the duty was limited to just ₹5 per 1,000 sticks, while cigarettes longer than 75 mm were charged ₹10 per 1,000 sticks. Compared to that framework, the new excise rates represent a substantial increase and a clear departure from the earlier, lenient system.

Impact on Retail Prices

With the new excise duty in place, cigarette prices will now depend not only on brand positioning but also on physical size. Shorter and economy-category cigarettes are expected to witness a modest price rise. In contrast, longer and premium cigarettes will become significantly more expensive.

Industry experts believe this change could alter consumer preferences, as price-sensitive smokers may shift toward shorter or lower-taxed variants. Retail pricing strategies are also expected to be revised, with length emerging as a decisive factor in final pricing.

Excise Duty in Addition to GST

It is important to note that this excise duty will be levied over and above GST. Currently, tobacco products attract GST ranging from 18 percent to 40 percent, depending on the category. Although the GST compensation cess on tobacco has been removed, the overall tax burden on cigarettes is expected to remain close to 53 percent after the new excise is factored in.

Still Below Global Health Benchmarks

Despite the hike, India’s total tax burden on cigarettes remains below international public health recommendations. The World Health Organization advises that at least 75 percent of the retail price of tobacco products should consist of taxes to effectively curb consumption. Even after the latest increase, India’s cigarette taxation level falls short of this benchmark.

Government’s Objective Behind the Move

According to the finance ministry, the revised tax structure aims to curb tax evasion, boost government revenue, and align India’s tobacco taxation policy more closely with global public health standards. The government believes that higher taxes, especially on premium products, will discourage consumption and contribute to long-term reductions in health risks associated with tobacco use.

Overall, the new excise duty regime signals a tougher stance on tobacco taxation. From February 1, smokers can expect to pay more at the counter, especially for longer and premium cigarettes, as the government reshapes its approach to regulating and taxing tobacco products.