Cigarette tax: Centre imposes excise duty, effective February 1

The Union government has imposed an excise duty on cigarettes. These duties will be levied in a range of ₹2,050-8,500 per thousand sticks based on the length of the products and will come into effect on February 1. The finance ministry said in an order late on Wednesday.The move could increase the prices of cigarettes for an estimated 10 crore smokers in the world’s most populous nation.

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In December, the Centre approved a new law – the Central Excise (Amendment) Bill 2025 – that replaces a temporary levy on cigarettes and tobacco products.Wednesday’s statement showed that the excise duty would be imposed on cigarettes in addition to the existing 40% goods and services tax.

Total taxes on cigarettes in India currently make up about 53% of retail prices, well below the World Health Organisation benchmark of 75% aimed at discouraging consumption. This also includes a 28% goods and services tax and an additional value-based levy based on the size of the cigarettes.

The higher duties could have an impact on the sales numbers of cigarette manufacturers like ITC and Godfrey Phillips India.