How Much Cigarette, Beedi & Pan Masala To Cost From Feb 1 2026 as New GST, Excise and Health Cess Kick In

Smokers and consumers of chewing tobacco products will now feel a sharp pinch from February 1st, as the Centre rolls out a major tax overhaul on cigarettes, beedis and pan masala. The new framework introduces higher GST rates, fresh excise duties on cigarettes, and a Health and National Security Cess on pan masala, replacing the existing GST compensation cess and significantly raising the overall tax burden.

This is expected to push up retail prices across tobacco categories, with analysts warning of double-digit price hikes and visible impact on consumption as well as tobacco stocks.

What Has Changed? New Tax Rules Explained

Under the revised structure notified for 2026, tobacco and related products will attract multiple layers of taxation GST, excise duty, and cess applied simultaneously. These new levies come over and above GST which will be far more impactful than earlier cess mechanisms.

The government has positioned the changes as part of a broader push towards public health protection and national security funding, especially through the new cess on pan masala.

Revised GST Rates From February 1, 2026

As per the notification, GST rates on sin goods have been sharply revised, Cigarettes, pan masala and similar tobacco products will attract 40% GST and Beedis (biris) will attract 18% GST

After this it will be a significant increase for cigarettes and pan masala, which were earlier taxed under a different GST-plus-cess structure. Beedis, largely consumed by lower-income groups, have been kept in a relatively lower slab but will still see a price impact.

Fresh Excise Duty Slapped on Cigarettes

In addition to GST, cigarettes will now attract additional excise duty based on length and filter type. The new excise structure ranges from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on the category. Short cigarettes, non-filter variants, and king-size cigarettes will all be taxed differently, but the net effect will be higher costs for manufacturers, who are expected to pass on the burden to consumers. This is the first major excise hike on cigarettes in several years, breaking a long freeze on tobacco duties.

Health and National Security Cess on Pan Masala

Pan masala manufacturers will face a Health and National Security Cess, calculated based on production capacity and machinery, rather than retail prices alone. This capacity-linked cess is expected to substantially raise compliance costs for manufacturers and disrupt pricing strategies in the segment.

How Much Will Cigarettes and Pan Masala Prices Rise?

Market analysts estimate that cigarette prices could jump by 15% to 28% after the new tax regime. For instance, a cigarette currently costing around Rs 18 per stick could rise to Rs 21-22 per stick, depending on brand and size.
Large manufacturers such as ITC are expected to gradually pass on the higher tax burden to consumers, though the timing and quantum of hikes will vary.

Pan masala prices are also expected to rise sharply, though exact figures will depend on how companies adjust production volumes and pricing to absorb the new cess