Tobacco Taxation in India: A Differential Impact Analysis

Tobacco taxation is an important policy instrument for reducing tobacco consumption in India, but available evidence suggests that responses to tobacco prices and taxes may vary across different groups of consumers and tobacco products. This study examines how tobacco tax and price changes are associated with consumption patterns across four dimensions: product type, income, age and gender. The study draws on secondary evidence from government tax records, peer-reviewed research and national surveys. Using a qualitative, descriptive, non-experimental approach, the study synthesis existing evidence on tobacco price responsiveness across this dimension. The available literature indicates that price responsiveness varies by product type, with some studies reporting greater responsiveness for lower- priced products such as bidis and smokeless tobacco than for cigarettes, Price responsiveness also appears to vary across income groups, with several studies reporting greater responsiveness among lower-income groups. Evidence further suggests that younger consumers may be more responsive to tobacco prices than older established users. With respect to gender, available data show differences in tobacco-use prevalence between men and women; however, the existing evidence does not provide sufficient basis for estimating gender-specific price elasticities or for attributing these differences directly to taxation. It is important to note that most of the consumption and elasticity evidence synthesised here comes from surveys and studies conducted between 2008 and 2019 — largely pre-dating both India's 2017 GST regime and the further tax revisions of 2025-26 — while the tax and fiscal data reflect the current 2025-26 structure. The two bodies of evidence cannot be directly matched in time, so findings on historical price responsiveness should be read as background Page 2 of 27 evidence on how Indian tobacco consumers have behaved in the past, not as a direct measure of how they are responding to the current tax system. Overall, the evidence indicates that a single, uniform tax policy is unlikely to affect all tobacco users equally, and a more nuanced approach — one that accounts for product type, income, age, and the limits of the available data — is needed to make tobacco taxation a fairer and more effective public health policy in India.