--- title: "Tobacco New GST Rate 2026: 40% + Cess Rate on Tobacco, Beedis" description: "New GST rate on tobacco in 2026 is 40% plus cess on all tobacco products and beedis. Get GST-ready with Busy and apply the correct rate on every invoice." canonical: "https://busy.in/gst-rates/tobacco/" author: "Madan Murari" published: "2025-04-29T12:48:28.000Z" category: "GST Rates" --- - The **tobacco gst rate** from 1 February 2026 is **40%** for cigarettes and most tobacco products, while bidis attract **18% GST**. - The earlier GST plus Compensation Cess structure on specified tobacco products has been replaced under the revised tax framework. - Chewing tobacco, jarda scented tobacco, and gutkha are also subject to applicable **Central Excise** provisions from 1 February 2026. - Businesses can claim eligible Input Tax Credit (ITC) on taxable GST supplies, subject to applicable GST conditions. - Correct HSN classification and applicable GST, excise, and other levy compliance are important for tobacco businesses. # New GST on Tobacco Products in India: Cigarettes, Chewing Tobacco & More Tobacco is one of the most heavily taxed products in India. Under the **Goods and Services Tax (GST)** regime, **tobacco products like cigarettes, chewing tobacco, and gutkha** are subject to both GST and an additional compensation cess. This dual-tax approach is designed to discourage tobacco consumption while generating revenue for public welfare. In this blog, we’ll explain the **GST rates on different types of tobacco products**, applicable HSN codes, cess rates, and implications for consumers and businesses. ## **GST Rate on Tobacco Products in India** Tobacco products are among the highest taxed goods in India. Before 1st Feb 2026, most tobacco products were taxed at 28% GST, and many also attracted a compensation cess depending on the product category. From 1 February 2026, the **gst on tobacco** under the revised notified structure is **40%** for most specified tobacco products, while bidis attract **18% GST**. ## New Tobacco GST Rate The table below combines the old GST rates and the revised GST rates in one place. The old rate column shows the GST rate applicable before 1st Feb 2026, while the new rate column shows the revised GST rate applicable from 1st Feb 2026. The **gst on tobacco products** from 1 February 2026 is **40%** for most specified tobacco products, **18%** for bidis, and **5%** for tobacco leaves under the applicable classifications. | Tobacco Product | HSN Code | New GST Rate (From 1 Feb 2026) | Old GST Rate (Before 1 Feb 2026) | | --- | --- | --- | --- | | Cigarettes | 2402 | 40% | 28% | | Chewing tobacco / zarda / gutkha / khaini | 2403 | 40% | 28% | | Cigars and cigarillos | 2402 | 40% | 28% | | Smoking tobacco | 2403 | 40% | 28% | | Bidis | 2403 | 18% | 28% | | Unmanufactured tobacco other than tobacco leaves | 2401 | 40% | 28% | | Tobacco leaves | 2401 | 5% | 5% | ## **HSN Codes for Tobacco Products** Tobacco products are mainly classified under Chapter 24. In practical terms, the most relevant HSN groupings are: - HSN 2401 - Unmanufactured tobacco and tobacco refuse - HSN 2402 - Cigarettes, cigars, cheroots, and cigarillos - HSN 2403 - Other manufactured tobacco such as chewing tobacco, gutkha, smoking tobacco, and bidis Live Demo Available Today ## Scan Tobacco Product Barcodes for Compliance-Ready Billing Trusted by 6,00,000+ Users 4.6 Google Rating ## How to Calculate GST on Tobacco Products From 1st Feb 2026, specified tobacco products such as cigarettes, chewing tobacco, zarda, gutkha, and other notified tobacco products follow a **Retail Sale Price (RSP)-based valuation mechanism**. **Bidis are excluded from this special RSP-based valuation mechanism** and continue to follow the normal transaction value method. ### **GST Calculation Formula** For a notified tobacco product taxed at 40% GST: **Taxable Value = RSP ÷ 1.40** **GST Amount = RSP - Taxable Value** These formulas help you extract the GST portion from the declared retail sale price. ### **Example 1: Cigarette Pack at 40% GST** Suppose the declared RSP of a cigarette pack is **Rs 140**. **Taxable Value = 140 ÷ 1.40 = Rs 100** **GST Amount = 140 - 100 = Rs 40** So, if the RSP is **Rs 140**, the GST portion is **Rs 40**. ### **Example 2: Chewing Tobacco Pouch at 40% GST** Suppose the declared RSP of a chewing tobacco pouch is **Rs 70**. **Taxable Value = 70 ÷ 1.40 = Rs 50** **GST Amount = 70 - 50 = Rs 20** So, if the RSP is **Rs 70**, the GST portion is **Rs 20**. ### **Example 3: Bidi Bundle at 18% GST** Bidis attract **18% GST**, but they are not covered under the special RSP-based valuation mechanism. Suppose the taxable transaction value of a bidi bundle is **Rs 100**. **GST @18% = Rs 18** **Invoice Value = Rs 100 + Rs 18 = Rs 118** So, if the taxable value is **Rs 100**, the GST amount is **Rs 18** and the final invoice value is **Rs 118**. The lower **18% GST rate** applies to bidis from 1st Feb 2026, while valuation follows the normal GST transaction value provisions. **Get a Free Trial –** [**Best Accounting Software For Small Business**](https://busy.in/accounting-software/) ## **GST and Input Tax Credit (ITC) on Tobacco** Businesses engaged in manufacturing or selling tobacco can [**claim ITC**](https://busy.in/gst/what-expenses-can-be-claimed-as-itc/) on inputs like packaging, flavouring agents, and processing equipment, **only if the tobacco is for resale or production**. However: - No ITC is allowed on free samples or promotional gifting of tobacco. - Proper documentation and HSN compliance are mandatory. ## **Compliance Considerations** Due to high tax rates and regulatory scrutiny, businesses must ensure: - Correct classification under **HSN 2402/2403** - Proper application of **chewing tobacco gst rate and the cigarette rate** - Timely filing of GST and compensation cess returns **Get a Free Demo –** [**Best Billing and Invoicing Software**](https://busy.in/accounting-software/invoicing-and-gst-billing/) ## **Final Thoughts** The **gst on tobacco products in india** is designed to be high to reduce public consumption and support health programs. Whether it’s **chewing tobacco** or **cigarettes**, understanding the gst on tobacco products and compliance rules is critical for both businesses and consumers. Always ensure proper HSN classification and billing to stay compliant with India’s evolving GST framework. ## About the author **Madan Murari** Hi there! I’m a Chartered Accountant with over 20 years of experience in financial accounting and a passion for writing. I enjoy simplifying complex topics like GST and income tax, believing that learning should be a lifelong journey. I'm here to share insights and make financial matters easier for everyone! ## Frequently asked questions ### What is the GST rate on tobacco products in India? From 1 February 2026, the **bidi gst rate** is **18%**, while the **cigarette gst rate** and GST on various other tobacco products other than bidis is **40%**. ### What is the GST on cigarettes specifically? Cigarettes attract 40% GST from 1 February 2026. ### What is the chewing tobacco GST rate? Chewing tobacco attracts 40% GST under the revised regime effective from 1 February 2026. ### Can retailers claim GST credit on tobacco items? Yes, generally businesses can claim GST input tax credit on tobacco purchased for taxable resale, subject to normal GST conditions and restrictions. ### Why is GST on tobacco in India so high? Tobacco is taxed heavily as a sin good to discourage harmful consumption and maintain government revenue. ## Related articles - [New GST on Skincare Products: Rate, Branding & Retail Pricing](https://busy.in/gst-rates/skincare-products/) - [New GST on Industrial Machinery: Slabs, ITC & MSME Effect](https://busy.in/gst-rates/industrial-machinery/) - [New GST on Restaurant Meals: Dine-in, Takeaway & Delivery Compared](https://busy.in/gst-rates/restaurant-meals/) - [New GST on Kitchen Utensils: What’s Taxed and What’s Not?](https://busy.in/gst-rates/kitchen-utensils/) - [New GST on Online Education: Rate, Exemptions & EdTech Impact](https://busy.in/gst-rates/online-education/) - [New GST on Packaging Materials: Tax Implication Across Industries](https://busy.in/gst-rates/packaging-materials/) - [New GST on Digital Marketing Services: Tax Rates & Input Credit Explained](https://busy.in/gst-rates/digital-marketing-services/) - [New GST on Pesticides: Rates, Agri-Exemptions & Sector Impact](https://busy.in/gst-rates/pesticides/) - [New GST on Butter: From Dairy to Dining – What You Pay](https://busy.in/gst-rates/butter/) - [GST on Honey: Rate, Applicability & Industry Outlook](https://busy.in/gst-rates/honey/)