Union Budget 2026: Cigarette prices surge up to Rs 55 per pack after excise duty hike

New Delhi: Cigarette prices have increased by a minimum of Rs 22 to 25 per pack of 10 sticks following the implementation of additional excise duty from Sunday.

According to distributors, premium cigarettes of 76 mm length will now cost more between Rs 50 and Rs 55 per pack of 10 sticks, depending on the brand.

While manufacturers are yet to issue revised MRP declarations, distributors have begun billing old stock to retailers with 40 per cent GST.

With wholesale markets shut on Sunday, distributors expect fresh stock with new MRP to be lifted from Monday onwards.

A packet of Wills Navy Cut (76 mm in length), a popular mid-sized cigarette, priced at Rs 95 per pack (10 sticks) are expected to cost between Rs 120 per pack, they said.

While Cigarettes with 84 mm in length, such as Gold Flake Lights, Wills Classic, Wills Classic Milds etc which are priced at Rs 170 per pack (10 sticks) are expected to cost between Rs 220 to Rs 225 per pack, they said.

Similarly, slim cigarettes as Classic Connect Cigarette (97 mm in length), priced at Rs 300 (for a pack of 20 sticks), are expected to have an MRP of Rs 350.

The distributors expect cigarette packs with new MRPs to arrive from the manufacturers by the end of the month.

"Some of the companies have already put their stocks on hold. They will start releasing after billing under new tax structures," said a stockist.

According to AICPDF, there are around 8,000 to 9,000 stockists of Cigarettes and tobacco products in the country.

However, distributors fear that price hikes may lead to smuggling and the proliferation of counterfeit products.

All India Consumer Products Distributors Federation (AICPDF), which claims to represent over 4.5 lakh distributors and more than 1.3 crore kirana and retail outlets across India, cautioned that a sharp tax increase on legal sin products may harm the traditional, brick and mortar retail system, which are already facing a stiff competition from online platforms and quick-commerce giants.

"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," AICPDF President D Patil said.

An additional excise duty on cigarettes and tobacco products, and a health cess on pan masala, over and above the highest 40 per cent GST rate, has come into effect from February 1.

The cess and excise levies replaced the old 28 per cent Goods and Services Tax (GST), plus the compensation cess, on such 'sin goods', which had been taxed at these rates since GST was rolled out on July 1, 2017.

Under the new tax structure, short non-filter cigarettes (up to 65 mm) will attract an additional duty of about Rs 2.05 per stick, while short filter cigarettes of the same length will be charged around Rs 2.10 per stick.

Medium-length cigarettes (65-70 mm) will face an additional duty of roughly Rs 3.6-4 per stick, and long, premium cigarettes (70-75 mm) about Rs 5.4 per stick.

The highest duty of Rs 8.50 per stick applies only to unusual or non-standard designs of cigarettes, and most popular cigarette brands do not fall under this slab.

The levy of such a cess on pan masala and excise duty on tobacco was approved by Parliament in December. The GST Council, comprising finance ministers from the Centre and states, had in September 2025 decided on the mechanism to levy cess and excise duty on such products over and above GST once the compensation cess mechanism ended after repayment of loans.

The GST Council had decided that the compensation cess will cease to exist after the repayment of loans taken to compensate states for GST revenue loss during Covid. The Rs 2.69 lakh crore loan was scheduled to be repaid by January 31, 2026.