GST hike to 40% jolts tobacco prices
NEW DELHI: The Union Budget 2026 has delivered a sharp blow to tobacco and nicotine consumers, with the government raising the Goods and Services Tax (GST) on all such products—including cigarettes and pan masala—from 28 per cent to 40 per cent.
The move, aimed at curbing consumption and improving public health outcomes, has already led to a noticeable increase in prices at distributor and retail levels. However, several online delivery platforms continue to sell these products at pre-hike rates, creating price disparities in the market.
Following the budget announcement, distributors revised their price lists and passed on the higher costs to retailers, leaving small shop owners struggling to adapt. Retailers say the sudden increase has disrupted sales, particularly among price-sensitive customers.
“It has been hectic to sell the products now, but generally those who are willing to buy in single quantity are buying it from us,” a retailer said, expressing concern over shrinking margins and slower stock movement.
Despite higher prices at brick-and-mortar stores, consumers have noted that online platforms such as Swiggy Instamart and Zepto are still offering cigarettes and pan masala at older rates. Retailers argue that this uneven pricing is hurting their business, as customers increasingly question the difference between online and offline prices.
Many consumers, especially those who prefer buying single units, say online purchases are not always practical. “We don’t know how to buy it online and we don’t always want to buy in bulk. So we have to buy it from a retailer,” a consumer told Millennium Post, underlining continued dependence on neighbourhood shops despite higher prices.
The tax hike has also sparked discussions around changing consumption habits. Some consumers view the move as a wake-up call. “The day is closer when we have to buy a cigarette like we buy a paneer cube, or we have to quit smoking,” one consumer remarked, suggesting that rising costs could eventually reduce demand.
Others have welcomed the decision. A consumer’s wife supported the move, saying, “Good initiative from the government. We couldn’t do it; let the government handle the situation.” Her view reflects a broader sentiment among families affected by tobacco use, who hope higher taxes will act as a deterrent. As authorities monitor implementation and online platforms are expected to align prices with the revised tax structure, the GST hike has reshaped the tobacco market—tightening retail margins, confusing consumers, and reigniting debate over regulation versus personal choice.
