The government has levied excise duty on cigarettes in the range of Rs 2,050 to Rs 8,500 per thousand sticks, based on the length of the products. The move is expected to lead to higher cigarette prices, which could adversely impact sales volumes of ITC and other cigarette manufacturers.

From 1 February 2026, pan masala, cigarettes, tobacco, and similar products will attract a goods and services tax (GST) of 40%, while biris will be taxed at 18%.

In addition, a Health and National Security Cess will be levied on pan masala, while tobacco and related products will be subject to the additional excise duty. Parliament had approved the two bills in December, paving the way for the levy of the new cess on pan masala manufacturers and excise duty on tobacco products.

The new levies on tobacco and Pan masala will be over and above the GST rate and will replace compensation cess currently applicable on these sin goods.