The upcoming national budget for FY2026–27 is expected to introduce significant changes to tobacco taxation, including higher cigarette prices across all tiers and a steep increase in duties on emerging nicotine products, according to budget proposals.
Under the proposed measures, a new customs code would be introduced to discourage the import of highly harmful nicotine granules and nicotine pouches. These products could face a supplementary duty of up to 350 per cent, reflecting the government’s dual objective of strengthening public health protection and increasing revenue collection from the tobacco sector.
The proposal also outlines a revised pricing structure for cigarettes across four market tiers. The lowest tier, currently priced at Tk60 per pack of 10 sticks, would see a modest increase of Tk2 to Tk62. The medium tier is expected to rise from Tk80 to Tk92, while the high tier may increase from Tk140 to Tk160. The most significant hike is proposed for the premium segment, where prices could jump from Tk185 to Tk210 per pack of 10 sticks.
In addition to cigarettes, nicotine pouches and heated tobacco products are also set to face stricter taxation. The proposal suggests setting the maximum retail price of nicotine pouches at Tk500 per 10 grams, with a 40 per cent supplementary duty, while heated tobacco products may be capped at Tk210 per 10 sticks, with a 67 per cent supplementary duty.
The budget framework also includes a proposal to introduce a “Track and Trace” system for tobacco products. The mechanism is intended to strengthen monitoring of production and supply chains in order to curb illegal trade and reduce tax evasion in the sector.
An industry insider has raised concerns over the proposed cigarette price adjustments and their potential impact on revenue collection under the upcoming FY2026–27 budget.
The insider suggested that the proposed increase in the lower-tier segment is relatively modest compared with the higher segments, arguing that this could have implications for overall revenue generation. According to the source, a significant share of cigarette consumption comes from lower-priced products and, therefore, limited price adjustments in this segment may affect the government’s projected revenue growth.
The source further indicated that if higher tiers are increased more aggressively while the lower tier sees only minimal adjustment, the revenue impact may not align with expectations.
