Rule Change: Cigarette, Pan Masala Prices Set To Rise From February 1 As Govt Hikes Excise

Rule Change: The month of January is coming to an end, and the new month of February will begin tomorrow. Like every month, this month is also going to start with several major changes (Rule Change From 1st February). These include everything from LPG cylinder prices to rules related to FASTag on toll taxes (FASTag Rule Change). However, the biggest shock will be for pan-masala and cigarette lovers. Yes, the prices of these tobacco products may increase from February 1, 2026 (Pan-Masala Cigarette Price Hike), as the government is going to increase the tax levied on them.

The month of February is going to start tomorrow with several major changes, and one of them will be a shock for pan-masala and cigarette enthusiasts, as their prices may increase.

Preparations were made at the beginning of the year

At the beginning of this year, the government notified a new excise duty and cess in place of the GST compensation cess. According to a PTI report, under this, a provision has been made for higher taxes on tobacco products and pan masala in the country from February 1, 2026. According to the notification, the new duties on tobacco and pan masala will be levied in addition to the applicable GST rates.

In early January, the Finance Ministry also notified the Chewing Tobacco, Zarda and Gutkha Packing Machine (Capacity Determination and Duty Collection) Rules, 2026. These rules lay down the process for assessing production capacity and collecting duty from manufacturers of chewing tobacco products.

Tax effect will be visible on prices

Under the revised tax structure by the government, the imposition of additional excise duty on cigarettes and other tobacco products from February 1st will see the highest increase on longer, premium cigarettes. Under the new changes, an excise duty ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks will be levied based on the length of the cigarette, effective from February 1st.

What did Crisil say about this?

According to a Crisil report, the cigarette industry may face a decline in sales due to the increase in duties.

Summary

Currently, cigarettes are subject to a 28 percent Goods and Services Tax (GST) along with various compensation cess charges, but

from February 1st, this compensation cess will be removed, and an additional excise duty will be applied based on the length of the cigarette.