India has introduced a new excise duty on cigarettes, ranging from 2,050 to 8,500 rupees ($22.8–$94.5) per thousand sticks depending on product length, the finance ministry announced late Wednesday. The levy, effective February 1, is expected to raise prices for an estimated 100 million smokers in the country.
The move follows the December approval of the Central Excise (Amendment) Bill 2025, which replaces a temporary tobacco levy. The new excise duty is applied in addition to India’s 40% goods and services tax, bringing the total tax burden on cigarettes to approximately 53% of retail prices. While this marks a significant increase, it remains below the World Health Organization’s recommended 75% benchmark aimed at discouraging smoking.
Analysts say the higher levies are likely to impact major cigarette producers in India, including ITC and Godfrey Phillips India. The increased costs could influence consumer behavior, potentially reducing consumption while boosting government revenue from excise and GST collections.
The government’s move is part of a broader strategy to curb tobacco use and address public health concerns, though experts note that India still has room to raise taxes further to align with global anti-smoking standards.
