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With the presentation of Union Budget 2026-27, the government has delivered a major blow to tobacco users. Finance Minister Nirmala Sitharaman announced a new tax framework on cigarettes and other tobacco products, which came into effect immediately from February 1. The result: cigarette prices across all categories have risen sharply.

Until now, cigarettes were taxed under a system that included 28% GST along with a compensation cess , a structure that had been in place since 2017. This system has now been scrapped.

Under the new regime, cigarettes will face a combination of:

• Fresh excise duty
• Health and National Security cess
• GST increased by 40%

This three-layer structure, being referred to as a “tax triangle,” has pushed prices up rapidly across the board.

How Much Will Rs 10 Cigarette Cost Now?

Cigarettes that earlier cost around Rs 10 per stick are now significantly more expensive. A new excise duty of roughly Rs 2 to Rs 3 per cigarette has been added, taking the price to about Rs 12-13 per stick.

The impact is even more noticeable when buying a full pack. A 10-stick pack that earlier sold for around Rs 100 will now cost approximately Rs 130-140, depending on the brand and retailer.

The tax hike has been structured according to cigarette length, with longer and premium variants seeing steeper increases:

• 65-70 mm cigarettes: additional Rs 3.6-4 per stick
• 70-75 mm cigarettes: about Rs 5.4 more per stick

Non-standard or designer cigarettes have been hit the hardest, with a tax increase of Rs 8.50 per stick.

Market estimates suggest that some cigarette variants previously priced at Rs 15-18 per stick could rise to Rs 70-72 once the new taxes are fully passed on to consumers.

The government’s intent behind this sharp increase is clear: by making cigarettes and tobacco products more expensive, it aims to curb consumption, especially among young people and first-time users.