Cigarette, pan masala may become costlier:Govt notifies levies of additional taxes on tobacco pan masala on top of 40% GST from 1 Feb 2026

The government of India has notified the levy of additional taxes on tobacco products from 1 February 2026. This may increase the price of these products for consumers. Who’s Affected? Businesses that make and sell tobacco and pan masala will need to adjust to the new tax rules. The government is introducing two new taxes: Additional Excise Duty: This will be levied on tobacco products.
Health Cess: This will be imposed on pan masala. These new taxes are on top of the Goods and Services Tax (GST) of 40% will be levied from 1 February . Currently, these products have a “compensation cess,” but that will go away from next month. What This Means for Prices? Pan masala, cigarettes, and tobacco will have a GST rate of 40%.
Biris will have an 18% GST rate.
The new “Health and National Security Cess” will be added to pan masala.
Additional excise duty will be added to tobacco products. New Rules for Tobacco Businesses: The government is also introducing new rules for businesses that make chewing tobacco, jarda scented tobacco, and gutkha. These rules are about how the government will determine the capacity of the packing machines used to make these products, which will affect how much tax they pay. The government’s new rules could impact sales and profits for these businesses.
Tobacco Company Stocks Plunge Shares of cigarette manufacturing companies are experiencing heavy selling pressure following the news. ITC, the market leader known for brands like ‘Gold Flake’ and ‘Classic,’ saw its stock fall by 8.62%, trading from ₹402 to ₹368. Godfrey Phillips India, which sells Marlboro cigarettes, also saw its shares decline by 12%. The impact is also visible on the FMCG index, which is trading down by more than 3%. ​