New GST on Tobacco Products in India: Cigarettes, Chewing Tobacco & More
- 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.
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.
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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% |
Tobacco Product
HSN Code
New GST Rate
(From 1 Feb 2026)
Old GST Rate
(Before 1 Feb 2026)
Tobacco Product
HSN Code
New GST Rate
(From 1 Feb 2026)
Old GST Rate
(Before 1 Feb 2026)
Tobacco Product
HSN Code
New GST Rate
(From 1 Feb 2026)
Old GST Rate
(Before 1 Feb 2026)
Tobacco Product
HSN Code
New GST Rate
(From 1 Feb 2026)
Old GST Rate
(Before 1 Feb 2026)
Tobacco Product
HSN Code
New GST Rate
(From 1 Feb 2026)
Old GST Rate
(Before 1 Feb 2026)
Tobacco Product
HSN Code
New GST Rate
(From 1 Feb 2026)
Old GST Rate
(Before 1 Feb 2026)
Tobacco Product
HSN Code
New GST Rate
(From 1 Feb 2026)
Old GST Rate
(Before 1 Feb 2026)
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
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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.
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GST and Input Tax Credit (ITC) on Tobacco
Businesses engaged in manufacturing or selling tobacco can claim 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
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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.
