Overview
- An official notification sets Feb. 1, 2026 for the new regime, ending the GST compensation cess and fixing GST at 40% for tobacco and pan masala and 18% for bidis.
- Cigarettes will face a length-based specific excise of about ₹2,050–₹8,500 per 1,000 sticks, which applies in addition to GST.
- Pan masala will be subject to a Health and National Security Cess, while chewing tobacco, jarda and gutkha shift to machine-capacity-linked duty with mandatory machine registration and monthly deposits.
- Compliance changes include an MRP-based GST valuation for specified smokeless tobacco products and detailed capacity and monitoring rules to curb under-reporting.
- Tobacco shares sold off after the notification, with ITC down roughly 4–7% to multi-year lows and Godfrey Phillips off about 8–10%, as brokerages projected double-digit price hikes and potential volume pressure.