New Delhi: The Ministry of Finance has notified a significant revision in excise duty on cigarettes and other tobacco products, with the new rates set to come into effect from 1 February this year.
The move marks the return of a standalone excise duty regime on tobacco, alongside the existing 40 per cent Goods and Services Tax (GST).
As per the notification issued on Wednesday, additional excise duty on cigarettes will range from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on the length and category of the product.
The levy will be imposed over and above the GST applicable on tobacco and related items.
The duty revision follows Parliament’s recent passage of the Central Excise (Amendment) Bill, 2025, which enables the government to recalibrate excise duties on tobacco products after the expiry of the GST compensation cess.
Finance Minister Nirmala Sitharaman clarified in Parliament that excise duty is not a cess and that revenues collected will form part of the divisible pool, with 41 per cent shared with states.
She also noted that tobacco taxes were raised annually before the introduction of GST, largely due to health concerns, and that higher prices act as a deterrent to consumption.
According to the minister, government initiatives have led to over 1.12 lakh acres of tobacco cultivation shifting to alternative crops between 2018 and 2021-22.
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