Cigarette Tax Hike Shocks Market: ITC, Godfrey Phillips Shares Plunge

In a slew of announcements made during the 2023 budget presentation, Finance Minister Nirmala Sitharaman has made some sectors shine, has provide relief to tax payers, but has hiked taxes on certain products. Here’s a look at what has become expensive and what has become cheaper. Finance Minister Nirmala Sitharaman has announced an increase in custom duty on cigarettes making it costlier. The tax on cigarettes have been hiked by 16 percent. Here is a look at what has become expensive:

Market

CNBC TV18•01-01-2026, 12:00

Cigarette Tax Hike Shocks Market: ITC, Godfrey Phillips Shares Plunge

•ITC shares down 9%, Godfrey Phillips down 15% after new cigarette excise duty notification.
•New tax structure includes 40% GST and higher excise duties, exceeding market expectations.
•Total tax per cigarette stick estimated to rise by 20-40%, pushing tax incidence to 65-80% of MRP.
•Companies may need 18-35% price hikes, risking volume impact, or face over 40% EBIT hit.
•Market seeks clarity on tax implementation, volume, margin, and long-term industry impact.

Why It Matters: Unexpected cigarette tax hike severely impacts ITC and Godfrey Phillips, raising concerns about price hikes, sales volumes, and illicit trade.

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