'₹18 To ₹72/Stick': New Tobacco Taxes Trigger Smuggling Fears, Risk Of Chinese Cigarettes Smoked Into Indian Market

The Centre’s decision to impose additional levies on tobacco products from February 1 has sparked concern on social media, with users warning that the move could unintentionally benefit Chinese cigarette manufacturers and smugglers while hurting consumers and government revenues.

Under the revised tax regime, the government will levy additional excise duty on tobacco products and introduce a new cess on pan masala. These levies will be imposed over and above the Goods and Services Tax (GST) and will replace the existing compensation cess on such “sin goods,” news agency PTI reported.

According to a government notification, consumers will have to pay a 40 per cent levy on pan masala, cigarettes, tobacco and similar products from February 1, while biris will attract 18 per cent GST. In addition, a Health and National Security Cess will be imposed on pan masala, whereas tobacco and related products will face additional excise duty.

The announcement triggered a sharp reaction online, with several users warning that steep price hikes could fuel smuggling from foreign countries.

Some users claimed that higher prices would lead to loss of tax revenue for the government, while illegal networks could thrive. There are also speculations that cigarette prices could rise as much as fourfold, though experts estimate that cigarettes longer than 75 mm may become costlier by Rs 2–3 per stick.

PR Sundar, an X user, wrote, "Cigarette prices are likely to be increased by 4 times. Chinese Cigarette manufacturers and smugglers are happy. As usual common man and the government will lose."

The revised taxes have already impacted the stock market, with shares of tobacco companies declining. India is estimated to have over 10 crore smokers.