New Delhi, Jan. 28 -- Crisil Ratings reports that the domestic cigarette industry is preparing for a 6-8 per cent volume reduction in the next fiscal year. This follows the imposition of additional excise duties and an increase in GST rates, which are effective February 1. Under the new tax structure, the compensation cess component will be removed, and an additional excise duty ranging from Rs 2.05 to Rs 8.5 per stick will be levied based on cigarette length. Furthermore, the GST applicable to the final price of cigarettes will increase to 40 per cent.

The tax changes will impact different market segments in varying ways. Mid to premium cigarettes, which are longer than 65 mm, will face excise duties between Rs 3.6 and Rs 8.5 per stick....