New Delhi, February 1: Cigarette prices across India have seen a sharp increase of up to Rs 55 per pack starting February 1, following the implementation of a new excise duty structure introduced in the Union Budget. The price hike, which ranges from Rs 22 to Rs 55 depending on the brand and stick length, comes as the government transitions away from the previous GST compensation cess mechanism.

According to industry distributors, the impact is being felt most significantly in the premium segment. Cigarettes measuring 76 mm in length are expected to see a price jump of Rs 50 to Rs 55 per pack of 10. Cigarettes, Pan Masala Costlier From Today; Alcohol Tax Rules Simplified Under Budget 2026-27.

Popular mid-sized brands, such as Wills Navy Cut (76 mm), which previously retailed at Rs 95, are now projected to cost approximately Rs 120. In the 84 mm premium category, brands like Gold Flake Lights and Wills Classic are expected to rise from Rs 170 to as much as Rs 225 per pack. Slim variants, often sold in packs of 20, may see an increase of Rs 50, bringing the MRP from Rs 300 to Rs 350.

Transition to New Tax Regime

The price adjustment follows the expiration of the GST compensation cess on January 31, 2026. This cess was originally implemented in 2017 to compensate states for revenue losses and was extended to repay a Rs 2.69 lakh crore loan taken during the pandemic. From Cigarette Prices to FASTag Rules: Key Changes That Came Into Effect From February 1.

Under the new permanent structure approved by the GST Council in September 2025:

  • Standard GST: Tobacco products remain at the highest 40% GST bracket.

  • Additional Excise Duty: Specific levies are now applied based on stick length.

  • Health Cess: A new health cess has been implemented for pan masala and related products.

Market Impact and Supply

While manufacturers have not yet released all updated MRP declarations, distributors began billing old stock to retailers at the new tax rates on Sunday. Most stockists expect fresh inventory with updated packaging and pricing to reach retail shelves by the end of the month.

"Some companies have temporarily put stocks on hold to recalibrate their billing systems under the new tax structure," noted a regional stockist.

Concerns Over Illicit Trade

The All India Consumer Products Distributors Federation (AICPDF), which represents over 4.5 lakh distributors, has expressed concern that the steep hike could backfire. The federation warned that significant price increases often lead to a surge in cigarette smuggling and the proliferation of counterfeit products.

AICPDF President D. Patil emphasized that tobacco remains a vital category for the nation’s 1.3 crore kirana stores, which are already struggling against the rise of quick-commerce platforms. "If this category is pushed into the hands of illicit networks, it threatens the survival of honest, brick-and-mortar retailers," Patil stated.

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(The above story first appeared on LatestLY on Feb 01, 2026 11:22 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).