Cigarettes Turn Costlier From Today As 40% Sin Tax Kicks In

Cigarettes will get 40% costlier from today, as higher taxes on tobacco products notified by the Union government take effect from February 1, 2026.

The Ministry of Finance had issued the notification on December 31, 2025, replacing the GST compensation cess with a 40 per cent sin tax under the Central Excise (Amendment) Bill, 2025. While the notification was issued earlier, the revised levy becomes applicable from today.

The notification also raises the GST rate on tobacco and related products from 28 per cent to 40 per cent. The revised rate applies to cigarettes, cigars, pan masala, manufactured and reconstituted tobacco, tobacco extracts, and inhalation products containing tobacco or nicotine substitutes.

Excise duty on cigarettes continues to be levied per 1,000 sticks. Under the earlier structure, the duty ranged from ₹200 to ₹735 per 1,000 cigarettes, depending on the category. Under the revised rates notified by the Centre, the duty now ranges from ₹2,700 to ₹11,000 per 1,000 cigarettes.

On a per-cigarette basis, this works out to about ₹2.70 to ₹11 per stick, compared with roughly ₹0.20 to ₹0.735 earlier.

The notification specifies that the revised tax structure applies from February 1, 2026.