Introduction The existence of a social gradient in tobacco use has been clearly established in a number of countries with people with lower socioeconomic status being more likely to use tobacco. It is not clear how far this gradient is evident within severely deprived communities. This study assessed the association between occupation as a marker of socioeconomic status and use of smoked and smokeless tobacco within "slum" areas of Delhi, India. Methods A census survey of 11 888 households, comprising 30 655 adults from 28 low-income communities (14 government-authorized and 14 unauthorized settlements called "Jhuggi-Jhopri/JJ" clusters) was conducted in 2012. The survey assessed age, sex, household size, occupational group, and current tobacco use. Independent associations with tobacco use were conducted using complex samples regression analysis, stratified by gender. Results A quarter of participants (24.3%, 95% confidence interval [CI] 21.5-27.5) used any tobacco. Slightly more people used smoked (14.6%, 95% CI 12.9-16.3) than smokeless (12.6%, 95% CI 10.7-14.8) tobacco, with a small minority being dual users (2.7%, 95% CI 2.1-3.5). Prevalence of any tobacco use was highest in unskilled (45.13%, 95% CI 42.4-47.9) and skilled (46.2%, 95% CI 41.1-51.4) manual occupations and lower in nonmanual (30.3%, 95% CI 26.2-34.7) occupations and those who were unemployed (29.0%, 95% CI 25.3-33.0). This was confirmed in adjusted analysis in men but associations were more complex in women. Conclusions Use of smoked and smokeless tobacco in low-income urban communities in India has a complex association with occupational status with both nonmanual occupation and unemployment being associated with lower prevalence of smoked and smokeless tobacco in men. Implications Tobacco use in high-income countries shows a strong inverse relationship with social grade, income, and deprivation such that use is much more common among those who can least afford it. This study is the first to look at this social gradient in the context of low-income communities in India, finding that both unemployment and nonmanual occupation were associated with lower rates of tobacco use in men. The data present a challenge to existing explanations of the social gradient, requiring further consideration of the conditions under which affordability may work to reduce health inequalities arising from tobacco use.