Cigarette, Gutkha Costs Set To Rise From 1 February 2026; Extra Excise Responsibility On Tobacco Merchandise To Be Levied

New Delhi: The Ministry of Finance has notified a serious revision in excise responsibility on cigarettes and tobacco merchandise, efficient February 1, 2026.

In keeping with the notification issued on Wednesday, the federal government has imposed further excise responsibility on cigarettes within the vary of Rs 2,050 to Rs 8,500 per 1,000 sticks, relying on the size and sort of the product.

The responsibility will likely be levied over and above the present 40 per cent Items and Providers Tax (GST) on tobacco and related product.

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This responsibility elevate comes shut on the heels of Parliament passing a Invoice geared toward growing excise responsibility on tobacco merchandise and their manufacturing.

The Central Excise (Modification) Invoice, 2025, handed by the Parliament lately, geared toward revising excise duties on tobacco and associated merchandise after the expiry of the GST compensation cess.

Finance Minister Nirmala Sitharaman had mentioned that the income collected will go to the divisible pool, and will likely be redistributed once more (on the 41%) with the States.

“Many members right here made the remark that it is a cess. Excise shouldn’t be a cess. Excise responsibility existed earlier than GST. Compensation cess is reverting again to the Centre to be collected as Excise responsibility, which will likely be redistributed to the States on the 41% allotted,” she had mentioned within the parliament.

Many international locations revise tobacco taxes yearly, whereas many hyperlink it with inflation, she famous. “Even in India, previous to GST, tobacco charges had been elevated yearly. This was primarily resulting from health-related issues, as greater costs or taxes had been supposed to behave as a deterrent so that individuals wouldn’t get into the behavior,” she mentioned.

The federal government is bringing again the excise responsibility which existed precedence to the GST system, she mentioned.The minister mentioned due to varied initiatives taken by the federal government, acreage beneath tobacco cultivation of over 1.12 lakh acres (45,323 hectare) moved to different crops between 2018 to 2021-22. It has shifted to sugarcane, groundnut, oil palm, cotton, chilli, maize, onion, pulses, and turmeric, she had mentioned.