Updated 1 January 2026 at 10:58 IST
ITC Under Pressure After Fresh Excise Duty Hikes
ITC shares fell over 4% on Thursday, hitting a 33-month low after the government announced a new excise duty on cigarettes effective February 1, 2026. The duty, ranging from ₹2,050 to ₹8,500 per 1,000 sticks depending on cigarette length, will apply in addition to the existing 40% GST. The move replaces the current compensation cess structure, triggering a sell-off in tobacco stocks including Godfrey Phillips India.
Shares of ITC Ltd fell sharply on Thursday, slipping to their lowest level in around 33 months, after the central government announced a fresh excise duty on cigarettes. The stock declined over 4% during intraday trade, making it one of the top laggards on benchmark indices.
The fall followed a government notification introducing a specific excise duty on cigarettes, which will come into effect from February 1, 2026.
Details of the Excise Duty
Under the new structure, cigarette excise duty will be charged based on length, with rates ranging from ₹2,050 to ₹8,500 per 1,000 sticks. The excise duty will be levied in addition to the existing 40% goods and services tax (GST) on tobacco products.
The new levy replaces the current compensation cess regime, which is scheduled to end in January.
Impact on Tobacco Stocks
ITC, which earns a substantial portion of its revenue from cigarette sales, saw sustained selling pressure throughout the trading session. The stock touched levels last seen in April 2023.
Other tobacco stocks also declined. Shares of Godfrey Phillips India fell sharply, reflecting broader concerns across the sector following the tax announcement.
What Investors are Watching
Market participants are closely tracking how cigarette manufacturers respond to the higher tax burden, including potential price increases and their impact on demand volumes. The revised excise duty framework will take effect at the start of the next financial cycle.
Published By : Shourya Jha
Published On: 1 January 2026 at 10:58 IST