Overview
- A Finance Ministry notification confirms GST at 40% for cigarettes, tobacco and pan masala from Feb. 1, with bidis at 18%.
- Specific excise on cigarettes will range from ₹2,050 to ₹8,500 per 1,000 sticks based on length, charged over and above GST.
- Pan masala will face a Health & National Security Cess, and new Packing Machines Rules, 2026 introduce capacity-based duty for chewing tobacco and gutkha.
- The GST compensation cess will cease on Feb. 1, with excise proceeds to be shared with states under Finance Commission formulas.
- Tobacco stocks fell after the notification, with ITC sliding roughly 4–6% and Godfrey Phillips down about 8–10%, as analysts estimated 22–28% higher costs for 75–85 mm cigarettes.