ITC Stocks Fall After Excise Duty Hike

Shares of major cigarette makers ITC and Godfrey Phillips saw sharp declines on Thursday, January 1, following the government’s announcement of a new excise duty on tobacco products, effective from next month.

Excise Duty Details and Impact

The Finance Ministry announced that cigarettes will now attract an excise duty ranging from ₹2,050 to ₹8,500 per thousand sticks, depending on product length, starting February 1. This move is expected to raise cigarette prices, potentially affecting sales for ITC and other tobacco manufacturers.

ITC Hits 52-Week Low

Following the announcement, ITC shares fell by up to 6% on the BSE, reaching a 52-week low of ₹379. Reports suggest that a large block deal also added downward pressure, with 4.03 crore shares (0.31% of equity) valued at ₹1,614.5 crore reportedly changing hands at ₹400 per share.

Over the past year, ITC shares have declined by 17%, while in the last six months, they are down 9%. The company, a key constituent of the Sensex and Nifty indices, has a market capitalization exceeding ₹4,75,000 crore.

Godfrey Phillips Shares Drop 10%

Godfrey Phillips saw an even sharper fall, tumbling 10% to the day’s low of ₹2,483.15 on the BSE. Despite this drop, the stock has recorded a 48.9% gain over the past year.

Excise Duty Added to GST

The newly announced excise duty will be in addition to the existing 40% GST rate, replacing the previous compensation cess on tobacco products. The Central Excise (Amendment) Bill 2025, approved by Parliament in December, formalized this permanent levy on cigarettes and similar products.

Currently, total taxes on cigarettes in India constitute around 53% of retail prices, which remains below the World Health Organization’s recommended benchmark of 75%, aimed at curbing tobacco consumption.

About the Author

Sorit Chaudhary

Author

View All Posts