Reports of a new Indian tax making single cigarettes cost Rs 72 are false. The proposed excise duty is levied per 1,000 units, not individually. This results in an actual tax increase of Rs 2.50 to Rs 10.30 per cigarette.
A lot of discussion has started about the new tax being imposed on cigarettes in India. It's being talked about everywhere, from social media to street corners. Amid curiosity about how much cigarette prices might go up, there were reports that under the new tax, a single cigarette would cost Rs 72. However, looking at the actual tax and duty being levied on cigarettes, this is incorrect. It's certain that cigarette prices will increase; there's no confusion about that. But the claim that a single cigarette will cost between Rs 18 and Rs 72 is false. A Reddit user has explained what the price increase will actually look like.
How is duty levied on cigarettes?
In India, excise duty on cigarettes is levied per 1,000 cigarettes, not per individual cigarette. This distinction is key to understanding the real impact of the proposed price hike.
Old Duty Structure (per 1,000 cigarettes)
Range: Rs 200 to Rs 735
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Per cigarette:
Rs 200 ÷ 1,000 = Rs 0.20
Rs 735 ÷ 1,000 = Rs 0.735
New Proposed Duty (per 1,000 cigarettes)
Range: Rs 2,700 to Rs 11,000
Per cigarette:
Rs 2,700 ÷ 1,000 = Rs 2.70
Rs 11,000 ÷ 1,000 = Rs 11.00
Actual Tax Increase Per Cigarette
The real impact comes from the difference between the new and old duties. According to the new tax, your cigarette could see a minimum increase of Rs 2.50 and a maximum of Rs 10.30.
Minimum Increase:
Rs 2.70 − Rs 0.20 = Rs 2.50 per cigarette
Maximum Increase:
Rs 11.00 − Rs 0.735 ≈ Rs 10.30 per cigarette
Actual tax increase = Rs 2.5 to Rs 10.3 per cigarette
This clearly shows that the tax increase is not Rs 54 per cigarette, as some viral discussions have claimed.
What could the retail cigarette price be?
Let's assume the current price of a commonly smoked cigarette is Rs 18. If the government passes on the entire tax to the consumer, the price could be as follows:
Lower Band: Rs 18 + Rs 2.5 ≈ Rs 20.5
Upper Band: Rs 18 + Rs 10.3 ≈ Rs 28.3
This could result in a price increase to between Rs 21 and Rs 28 per cigarette. This is a significant increase, but the claim that each cigarette will cost Rs 72, as is being discussed, is completely false.
Will this stop smoking?
Historically, moderate price hikes gradually reduce consumption but do not eliminate smoking entirely. Smokers concerned about prices might switch brands or reduce the number of cigarettes they smoke. However, those who are not bothered by the cost will not worry about it. Although cigarette prices in India are likely to increase due to the new policy, the claim that a single cigarette will cost between Rs 18 and Rs 72 is false.
