Cigarette prices in India are expected to climb significantly following Parliament’s approval of a major excise duty revision on tobacco products. The Central Excise (Amendment) Bill, 2025 — passed during the winter session — restores and expands the government’s power to levy higher excise duties on cigarettes and other tobacco products once the GST compensation cess ends.
Under the new structure, excise duty on cigarettes will rise steeply from the current range of ₹200–₹735 per 1,000 sticks to approximately ₹2,700–₹11,000 per 1,000 sticks, depending on the length and type of cigarette. Officials estimate that, as a result of these tax changes and cost adjustments, a cigarette currently selling for about ₹18 could eventually cost up to ₹72 — nearly four times its present price.
Why the Government Raised Taxes
The amendment aims to prevent cigarettes and other tobacco products from becoming more affordable over time. Finance Minister Nirmala Sitharaman explained that with the compensation cess sunsetting, reinstating excise duty is essential to maintain the overall tax burden on these products and support public health objectives.
Higher excise duty is part of a broader strategy to curb tobacco consumption, which remains a major health challenge in India. Smoking is linked to numerous diseases and healthcare costs, and price increases through taxation have long been used as a deterrent, especially among young people.
Potential Effects on Smokers and Market
While the projected increase to ₹72 per cigarette has attracted attention online, analysts note that final retail prices will depend on how manufacturers, distributors and state taxes interact with the new excise duty framework. Some price impact is likely immediate, but the full effect may unfold gradually as the GST compensation cess phases out.
The move has also sparked debate on social media, with supporters arguing that higher prices could encourage smokers to quit or reduce consumption, while critics warn of potential growth in black-market sales or illicit trade if legal cigarettes become too expensive.
What Comes Next
The amended law now awaits final implementation steps and notifications from the Central Board of Indirect Taxes and Customs (CBIC). Tobacco industry observers will be closely watching how companies adjust their pricing strategies in response to the updated excise duties.