India will implement a new tax regime for tobacco products starting February 1, 2026, increasing excise duties on cigarettes and introducing a health cess on pan masala. This move aims to align tobacco taxation with WHO standards and curb tax evasion, replacing the GST compensation cess. Cigarette prices are expected to rise, potentially impacting sales volumes and affecting farmers and retailers, while tobacco stocks have seen a significant decline following the announcement. The Tobacco Institute of India has expressed surprise and urged a review of the tax hike.