Cigarettes, Pan Masala Get Costlier From Today As New Excise Duty Kicks In

Cigarettes, pan masala, and other tobacco products have become costlier today onwards as the government's new tax structure, aiming to tighten regulation and keep tax levels high on these so-called 'sin goods', has kicked in. An additional excise duty will now be charged on the products, along with a new health and national security cess on pan masala.

These new levies will replace the earlier system under which the products were taxed at 28 per cent GST along with a compensation cess that has been in place since the launch of GST in July 2017.

According to the new rules, the excise duty will now range from Rs 2,050 to Rs 8,500 per 1,000 non-standard or uniquely designed cigarettes. It could even go up to Rs 11,000 in some categories - all based on the length and the variety of the cigarettes. Reports say that the short non-filter cigarettes (up to 65 mm) will have an excise duty of about Rs 2.05 per stick, while short filter cigarettes of the same length will be taxed higher around 2.10 per stick. The medium-length cigarettes will be taxed around Rs 4 per stick, and longer cigarettes around Rs 5.40 per stick.

The overall tax burden on cigarettes could reach 60 to 70 per cent from the previous 50 to 55 per cent.

Experts say that the cost of cigarettes - which is currently Rs 18 - may go up to Rs 70 to 72 in the future.

Apart from cigarettes, other tobacco products and pan masala have also become costlier.

The raw tobacco will face a 60 to 70 per cent excise duty, while the e-cigarettes and other nicotine products will be taxed 100 per cent. Products like pan masala and gutkha will also face health and national security cess.

The government's goal is to encourage people to quit smoking by increasing taxes on the harmful substances. However, experts have expressed concerns that it may lead to the selling of illegal and smuggled cigarettes in the market. According to the Think Change Forum, excessive taxes may lead people to turn to cheaper, illegal products rather than complying with the regulations.