Archive · 1 Jan 2026
India Imposes New Taxes on Cigarettes and Pan Masala
The Indian government has announced new taxes on cigarettes, pan masala, and other tobacco products starting February 1, 2026.
The Health Security and National Security Cess Act will impose a new cess on pan masala, while the Central Excise (Amendment) Act will introduce additional excise duty on cigarettes and various tobacco products.
Currently, these products have a 40% GST.
The new taxes will replace the compensation cess and ensure that the tax on these 'sin goods' remains high.
The money collected from the health and national security cess will be used for public health initiatives and national security.
The new excise duty on cigarettes will range from ₹2,050 to ₹8,500 per 1,000 sticks, depending on the length.
Unmanufactured tobacco will have a 60-70% duty, and nicotine products will have a 100% duty.
The announcement caused a significant drop in the stock prices of major cigarette manufacturers like ITC and Godfrey Phillips India.
New taxes on cigarettes, pan masala, and tobacco products to be implemented from February 1, 2026.
Health Security and National Security Cess Act to impose cess on pan masala.
Central Excise (Amendment) Act to introduce additional excise duty on cigarettes and tobacco products.
Current GST rate on these products is 40%.
New taxes to replace compensation cess and fund public health and national security.
- Who
- Indian Government
- What
- Implementation of new taxes on cigarettes, pan masala, and tobacco products
- When
- February 1, 2026
- Where
- India
- Why
- To maintain high taxation on 'sin goods' and fund public health initiatives and national security
- Date of Implementation
- February 1, 2026
- GST Rate on Tobacco Products
- 40%
- New Excise Duty on Cigarettes
- ₹2,050-8,500 per 1,000 sticks
- New Excise Duty on Unmanufactured Tobacco
- 60-70%
- New Excise Duty on Nicotine Products
- 100%
- Purpose of Health Security Cess
- Funding public health initiatives and national security
- ITC Stock Decline
- 9%
- Godfrey Phillips Stock Decline
- 17%
Sources
Cess on pan masala, additional excise duty on cigarettes and tobacco products from Feb 1
Exit old cess, enter new cess: Regime change for tobacco taxation from 1 February
Cigarette, Beedi, Pan Masala To Be Costlier From Feb 1 With New Tax, Cess
Government notifies new excise duty on tobacco, cess on pan masala from February 1
ITC, Godfrey Phillips shares tank up to 8% as govt announces excise duty on cigarettes effective February 1
Excise duty on cigarettes: Godfrey Phillips tank 8%, ITC hit 52 week low amid tax levy
Cigarette Excise Duty Hike: ITC Stock Declines To 21-Month Low On Block Deal, Tariff Rise
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