Recent discussions around a proposed tax hike on cigarettes in India have sparked intense debate, with claims that cigarette prices could jump from ₹18 to ₹72 per stick. However, a closer look at the actual tax structure and duty calculations shows that this claim is mathematically incorrect. While cigarette prices are likely to rise, the increase is far more moderate than widely suggested.
How Cigarette Duty Is Structured
Cigarette excise duties in India are levied per 1,000 cigarettes, not per individual stick. This distinction is crucial to understanding the real impact of the proposed hike.
Old Duty Structure (Per 1,000 Cigarettes)
- Range: ₹200 to ₹735
- Per cigarette:
- ₹200 ÷ 1,000 = ₹0.20
- ₹735 ÷ 1,000 = ₹0.735
New Proposed Duty (Per 1,000 Cigarettes)
- Range: ₹2,700 to ₹11,000
- Per cigarette:
- ₹2,700 ÷ 1,000 = ₹2.70
- ₹11,000 ÷ 1,000 = ₹11.00
Actual Tax Increase Per Cigarette
The real impact comes from the difference between new and old duties, not the headline numbers.
- Minimum increase:
₹2.70 − ₹0.20 = ₹2.50 per cigarette - Maximum increase:
₹11.00 − ₹0.735 ≈ ₹10.30 per cigarette
👉 Actual tax hike = ₹2.5 to ₹10.3 per cigarette
This clearly shows that the tax increase does not add ₹54 per cigarette, as claimed in some viral discussions.
What This Means for Retail Prices
Let’s assume a commonly cited current retail price of ₹18 per cigarette.
If the entire tax hike is passed on to consumers:
- Lower bound price:
₹18 + ₹2.5 ≈ ₹20.5 - Upper bound price:
₹18 + ₹10.3 ≈ ₹28.3
Realistic New Price Range
👉 ₹21 to ₹28 per cigarette
This is a meaningful increase, but nowhere near the dramatic ₹72 figure being circulated.
Will This Stop Smoking?
Historically, moderate price hikes reduce consumption gradually but do not eliminate smoking altogether. Price-sensitive users may cut back or shift brands, while heavy users often absorb the cost. The real impact will depend on enforcement, further tax changes, and public health measures.
Conclusion
While cigarette prices in India are likely to rise due to higher duties, claims of prices jumping from ₹18 to ₹72 per stick are factually incorrect. Based on duty calculations, the realistic post-hike price range is ₹21–₹28 per cigarette. The debate should focus on health outcomes, not exaggerated numbers.
