Updated Feb 18, 2026 12:31 IST
Cigarette Stocks: ITC may soon increase the prices of its cigarettes by 20-40%…
highlights
- Cigarette companies including ITC can increase cigarette prices by 20-40%.
- According to the report of ET Now, cigarettes are going to become costlier under the new tax rules.
- After the news, action was seen in the shares of cigarette companies.
Cigarette Stocks: The country’s largest cigarette company ITC may soon increase the prices of cigarettes of its different brands by 20 to 40 percent. According to ET Now news, after the implementation of the new tobacco tax structure and abolition of GST compensation cess, companies are preparing to pass the increased cost on to the customers. Fresh shipments may reach the market soon and retailers are also seen selling old stock at higher prices.
Strong movement in the stock market
There was a huge rise in the shares of cigarette companies amid the news of price increase. ITC shares reached Rs 331.25 intra-day, while the previous close was Rs 324.80. The stock gained about 1.78% and remained on the rise for the third consecutive session. It has risen about 5.5% in the last three sessions. The stock’s 52-week high is Rs 444.20 and low is Rs 302.
At the same time, shares of Godfrey Phillips India jumped by 12% and reached Rs 2,315. VST Industries also gained around 3.3%. Investors hope that by increasing the prices, companies will be able to handle the pressure on margins to a great extent. While earlier there was an expectation of 8-15% decline in EBIT, now it is expected to decline to around 2%.
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What is the new rule for cigarette companies?
On February 1, the government issued a notification abolishing GST compensation cess and introducing a new tobacco tax system. Under this, the excise duty on cigarettes has been reorganized in the range of Rs 2,050 to Rs 8,500 per 1,000 sticks, with 40% GST applicable. This has increased the total tax burden, due to which there is concern about demand and margins.
In the budget, the statutory rate of National Calamity Contingent Duty (NCCD) has been increased from 25% to 60%, which will be effective from May 1, 2026. However, the government has clarified that at present the effective rate will remain 25% only. That is, there is no immediate tax increase, but the way to increase the rate in future has been kept open.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice in any way. ET NOW Swadesh recommends its readers and viewers to consult their financial advisors before taking any money-related decisions.
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