Cigarette prices jump Rs 25 per pack after new excise duty
Cigarette prices have risen by Rs 22 to Rs 25 per pack following the implementation of additional excise duty and health cess from February 1. Distributors warn the hike may encourage smuggling and counterfeit products
New Delhi: Cigarette prices have increased by a minimum of Rs 22 to Rs 25 per pack of 10 sticks following the implementation of additional excise duty from Sunday.
According to distributors, premium cigarettes of 76 mm length will now cost between Rs 50 and Rs 55 more per pack of 10 sticks, depending on the brand.
While manufacturers are yet to issue revised MRP declarations, distributors have begun billing old stock to retailers with 40 per cent GST.
With wholesale markets shut on Sunday, distributors expect fresh stock with new MRPs to be lifted from Monday onwards.
A packet of Wills Navy Cut (76 mm in length), a popular mid-sized cigarette priced at Rs 95 per pack (10 sticks), is expected to cost around Rs 120 per pack, distributors said.
Cigarettes with 84 mm length, such as Gold Flake Lights, Wills Classic and Wills Classic Milds, priced at Rs 170 per pack (10 sticks), are expected to cost between Rs 220 and Rs 225, they said.
Similarly, slim cigarettes such as Classic Connect (97 mm in length), priced at Rs 300 for a pack of 20 sticks, are expected to have an MRP of Rs 350.
Distributors expect cigarette packs with new MRPs to arrive from manufacturers by the end of the month.
“Some of the companies have already put their stocks on hold. They will start releasing after billing under the new tax structure,” said a stockist.
According to the All India Consumer Products Distributors Federation (AICPDF), there are around 8,000 to 9,000 stockists of cigarettes and tobacco products in the country.
However, distributors fear that price hikes may lead to smuggling and the proliferation of counterfeit products.
AICPDF, which claims to represent over 4.5 lakh distributors and more than 1.3 crore kirana and retail outlets across India, cautioned that a sharp tax increase on legal ‘sin goods’ may harm traditional brick-and-mortar retailers, who are already facing stiff competition from online platforms and quick-commerce firms.
“Tobacco products are among the few categories where small shopkeepers are still relevant. If this too is pushed into the hands of illicit networks, what will be left for honest retailers? This is not just about taxation; it is about survival,” a federation representative said.
An additional excise duty on cigarettes and tobacco products, and a health cess on pan masala, over and above the highest 40 per cent GST rate, came into effect on February 1.
The cess and excise levies replaced the earlier 28 per cent GST plus compensation cess on such ‘sin goods’, which had been in force since July 1, 2017.
Under the new tax structure, short non-filter cigarettes (up to 65 mm) will attract an additional duty of about Rs 2.05 per stick, while short filter cigarettes of the same length will be charged around Rs 2.10 per stick.
Medium-length cigarettes (65–70 mm) will face an additional duty of roughly Rs 3.6 to Rs 4 per stick, and long, premium cigarettes (70–75 mm) about Rs 5.4 per stick.
The highest duty of Rs 8.50 per stick applies only to unusual or non-standard designs of cigarettes, and most popular brands do not fall under this slab.
The levy of the cess on pan masala and excise duty on tobacco was approved by Parliament in December.
The GST Council, comprising finance ministers from the Centre and states, had in September 2025 decided on the mechanism to levy cess and excise duty over and above GST after the compensation cess ended following repayment of loans.
The compensation cess will cease to exist after repayment of loans taken to compensate states for GST revenue loss during Covid. The Rs 2.69 lakh crore loan was scheduled to be repaid by January 31, 2026.
