In a significant development affecting tobacco consumers across India, cigarette prices have witnessed a substantial increase following the implementation of an additional excise duty effective from February 1, 2026. This new levy is being applied over and above the existing 40 percent Goods and Services Tax (GST), creating a dual tax burden that has directly translated into higher retail prices for various cigarette brands.
New Price Structure for Popular Cigarette Brands
The price hike has particularly impacted premium cigarette variants, with some brands experiencing increases of up to ₹50-55 per standard pack containing 10 sticks. According to industry reports and distributor information, several popular brands have already adjusted their pricing in response to the new tax regime.
Classic Connect cigarettes have seen one of the most notable increases, now retailing at approximately ₹350 for a pack of 20 sticks, up from the previous price of around ₹300. This represents a significant jump that reflects the additional tax burden on longer, premium cigarette variants.
Other affected brands include Gold Flake Lights and Wills Classic, both of which are now priced between ₹220 to ₹225 per pack of 10 sticks, compared to their earlier price point of approximately ₹170. Similarly, Wills Classic Milds have moved into the same price bracket of ₹220-225 per pack.
For the Wills Navy Cut variant (76 mm in length, 10 sticks), the new price stands at around ₹120 per pack, up from the previous ₹95. These price adjustments reflect the government's new excise duty structure that varies according to cigarette length and type.
Detailed Excise Duty Breakdown by Cigarette Category
The government notification specifies different duty rates based on cigarette characteristics:
- Unfiltered cigarettes shorter than 65 mm will attract an excise duty of ₹2,050 per 1,000 sticks (approximately ₹2.05 per stick)
- Filtered cigarettes shorter than 65 mm will be taxed at ₹2,100 per 1,000 sticks (approximately ₹2.10 per stick)
- Medium-length cigarettes (65-70 mm) will face duties ranging from ₹3.6 to ₹4 per stick
- Longer and premium variants (70-75 mm) will be subject to approximately ₹5.4 per stick
- An 'other' category carries a higher duty of ₹8.5 per stick
This tiered taxation approach means that longer cigarettes face proportionally higher duties, explaining why premium variants like Classic Connect have experienced more substantial price increases.
Industry Response and Distribution Challenges
The implementation timeline has created transitional challenges within the cigarette distribution network. While manufacturers have not yet issued formal revised Maximum Retail Price (MRP) declarations, distributors have reportedly begun billing existing stock to retailers with the standard 40 percent GST applied.
According to industry sources cited by PTI, distributors expect fresh stock with updated MRPs to become available from manufacturers starting Monday following the tax implementation. Some companies have temporarily placed their stocks on hold while they adjust to the new tax structures before releasing products into the market.
The All India Consumer Products Distributors Federation (AICPDF), which represents a substantial portion of the distribution network, has expressed concerns about the broader implications of these price increases. With approximately 8,000 to 9,000 stockists of cigarettes and tobacco products operating across the country, the federation warns that sharp tax increases on legal tobacco products could have unintended consequences.
Potential Market Distortions and Illicit Trade Concerns
Industry representatives have raised alarms about potential market distortions resulting from the significant price hikes. Distributors fear that increased prices on legally manufactured cigarettes may inadvertently encourage smuggling activities and the proliferation of counterfeit products in the market.
D Patil, President of AICPDF, emphasized the broader implications for traditional retail systems: "Tobacco products are among the few categories where small shopkeepers are still relevant. If this too is pushed into the hands of illicit networks, what will be left for honest retailers? This is not just about taxation—it is about survival."
The federation, which claims to represent over 4.5 lakh distributors and more than 1.3 crore kirana and retail outlets across India, cautioned that traditional brick-and-mortar retailers already facing stiff competition from online platforms and quick-commerce giants could be further disadvantaged by these developments.
The additional excise duty on cigarettes and tobacco products, along with a health cess on pan masala, represents the government's continued efforts to regulate sin products through fiscal measures. However, the industry response suggests that the implementation may require careful monitoring to prevent unintended market consequences while achieving public health objectives.
