New Delhi: India has imposed a fresh excise duty on cigarettes, a move that is expected to push up prices for millions of smokers across the country.
Under an order issued by the finance ministry late on Wednesday, cigarettes will attract an excise duty ranging from 2,050 rupees to 8,500 rupees per thousand sticks, depending on their length. The new rates will come into effect from February 1.
India is home to an estimated 100 million smokers, and the higher duty is likely to raise retail prices across most cigarette categories. The latest step follows the government’s approval in December of the Central Excise Amendment Bill 2025, which replaces a temporary levy on cigarettes and other tobacco products with a permanent legal framework.
The excise duty will be charged over and above the existing goods and services tax. Cigarettes already attract a 40 percent GST, according to the ministry’s order.
At present, total taxes account for around 53 percent of the retail price of cigarettes in India. This includes a 28 percent GST and an additional levy linked to the size of the cigarette. The overall tax burden remains well below the 75 percent benchmark recommended by the World Health Organization to curb tobacco consumption.
The increase in levies could weigh on sales volumes for major cigarette makers such as ITC and Godfrey Phillips India, analysts say, as higher prices may dampen demand in a price-sensitive market.
