Cigarette Prices in India Set to Surge from February 2026 Under New Tax Rules

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Cigarette prices across India are set to rise sharply from February 2026 due to a new excise duty and cess system on tobacco products, marking the first tax increase in nearly seven years. Distributors report that the price adjustments are already appearing in trade invoices, with standard packs of 10 sticks rising by Rs 22–25, while premium brands may see increases of Rs 50–55 per pack.

New Excise and Cess Structure Replaces GST Compensation Cess

The revised taxation framework, approved by Parliament in December, replaces the GST compensation cess that has been in place since GST was introduced in July 2017. Under the new rules, cigarettes and other tobacco products will face an additional excise duty and cess on top of the highest 40% GST slab, replacing the previous 28% GST plus compensation cess arrangement.

Price Hikes Vary by Cigarette Length and Category

The increase in prices will depend on both the type and length of cigarettes. Premium 76 mm cigarettes are expected to rise by Rs 50–55 per 10-stick pack. For example, Wills Navy Cut (76 mm), previously priced at Rs 95, could see prices rise to around Rs 120. Longer 84 mm cigarettes including Gold Flake Kings and Lights, Wills Classic, and Wills Classic Milds currently priced at Rs 170 per pack, are expected to cost around Rs 220–225.

Per-Stick Excise Duty Introduced

The Central Excise Act has been amended to levy excise duty on a per-stick basis, with rates differing based on cigarette length. While manufacturers have not yet widely updated MRPs, distributors have begun billing old stock under the new system. New stock reflecting revised prices is expected to move from wholesale markets starting Monday.

Concerns About Smuggling and Counterfeit Products

Industry experts warn that sharp price hikes could encourage illegal trade, including smuggling and counterfeit cigarettes. The All India Cigarette and Tobacco Distributors Federation estimates there are 8,000–9,000 stockists nationwide, and some companies reportedly held back stock ahead of billing under the new system. There are concerns that higher prices may push consumers toward unregulated channels, impacting legitimate retailers and formal distribution networks.

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