New Delhi: India’s Parliament has cleared a major amendment to the Central Excise law, enabling the government to impose significantly higher duties on cigarettes and other tobacco products. The legislation replaces the earlier temporary cess mechanism and restores a full excise-based framework for tobacco taxation.
According to the provisions approved by lawmakers, the revised excise duty will range from ₹2,700 to ₹11,000 per thousand cigarettes, depending on the length and category.
Officials stated that the move was necessary after the previous GST-linked compensation cess expired. The government aims to prevent cigarettes from becoming cheaper and to align taxation with public-health priorities. Finance Minister Nirmala Sitharaman emphasised that the measure is a structural realignment rather than a new levy.
Public-health experts note that India’s current tax burden on cigarettes about 53% of the retail price is still lower than the levels recommended by the World Health Organization to discourage consumption. The new duty structure is expected to lift tobacco taxes closer to those global benchmarks.
Industry assessments suggest that the revised excise slabs may translate into a 25%–40% average increase in taxation across cigarette categories. Analysts believe this will likely push up retail prices and reduce affordability.
The government has framed the reform as both a revenue measure and a tool to curb addiction, with lawmakers expecting the strengthened tax regime to contribute to long-term reductions in smoking prevalence.
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