Small Retailers Protest Against Tobacco Tax Hike

Small retailers associated with the Federation of Retailers Association of India protested outside the Ministry of Finance over tax hikes on legal tobacco. The tax, effective February 1, impacts cigarette costs and threatens small businesses' viability. FRAI advocates for a review of the taxation policy and consultation with retailers.

On Friday, small retailers and pavement sellers connected with the Federation of Retailers Association of India organized a protest in front of the Ministry of Finance. The demonstration was in response to recent tax increases on legal tobacco products, sparking concerns over declining sales.

A Ministry of Finance notification under the Chewing Tobacco, Jarda Scented Tobacco, and Gutkha Packing Machines Rules, 2026, announced an excise duty on cigarettes ranging from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on their length, coming into effect on February 1. This has occurred following the withdrawal of the compensation cess, as per an official statement.

Retailers argue that this tax hike will sharply escalate prices, subsequently reducing demand for legal tobacco products. This could critically affect small sellers who already work with thin profit margins. Protesters demanded the government reconsider the taxation structure, advocating for a rollback of the raised tax rates and stressing the need for consultation with retailer representatives before making such dramatic changes.

(With inputs from agencies.)