New Delhi: The government will increase excise duty on cigarettes from February 1, a move aimed at ensuring that tobacco products carry a tax burden proportionate to their severe public health impact and are aligned with global best practices, sources said.

The Finance Ministry has notified a revised excise duty ranging from ₹2,050 to ₹8,500 per 1,000 cigarette sticks, depending on their length. The duty will be levied over and above the Goods and Services Tax (GST), which is capped at 40 per cent for such products.

At present, cigarettes attract 28 per cent GST along with a compensation cess at varying rates. Taxes on cigarettes have remained unchanged for the past seven years, since the introduction of GST in July 2017.

Officials said the prolonged pause in tax revisions contrasts sharply with international practice and public health guidance, which recommend regular increases in tobacco duties to ensure cigarette prices rise faster than incomes. Globally, more than 80 countries revise tobacco taxes annually, often through inflation-linked mechanisms or multi-year excise schedules. Before GST was rolled out, India also followed a practice of annual excise increases on cigarettes.

In the global context, India’s seven-year gap in revising basic excise duty and cess rates makes it an outlier, sources said, adding that without periodic adjustments, the public health impact of tobacco taxation weakens significantly.

According to World Bank estimates, India’s total tax incidence on cigarettes is around 53 per cent of the retail price, well below the World Health Organization’s recommended benchmark of at least 75 per cent to achieve meaningful reductions in tobacco consumption.

By comparison, countries such as the United Kingdom and Australia tax cigarettes at more than 80–85 per cent of the retail price, while France, New Zealand and several European Union members maintain tax incidence levels exceeding 75–80 per cent. Even middle-income countries, including Turkey, South Africa, the Philippines and Chile, have raised cigarette taxes close to or above the WHO benchmark in recent years.

Sources said India’s current tax burden on cigarettes is neither excessive nor misaligned with international standards, leaving room for calibrated increases without departing from global norms. Maintaining higher tax incidence, they added, would help ensure that the economic and social costs of tobacco-related illnesses are not shifted disproportionately onto poorer households or the public exchequer.

The move to raise excise duty also follows the end of the GST compensation cess on cigarettes on January 31. Revising excise rates will help maintain revenue buoyancy, particularly in view of rising healthcare costs linked to tobacco use.

Officials noted that the economic burden of tobacco-related diseases in India is estimated at more than ₹2.4 lakh crore annually, underscoring the need for stronger fiscal and public health measures.