New Cess on Tobacco, Paan Masala from Feb 1: Prices to Rise, Shares Fall

• A new cess and additional excise duty will be implemented on tobacco products, paan masala, bidis, and cigarettes from February 1st.
• This new levy will replace the existing GST compensation cess and will be in addition to the current GST rates (40% for most tobacco, 18% for bidis).
• The Ministry of Finance also notified the Chewing Tobacco, Zarda, Flavored Tobacco, and Gutkha Packing Machine Rules 2026.
• Consumers can expect bidis, cigarettes, and paan masala to become more expensive due to these new taxes.
• Shares of major cigarette companies like ITC and Godfrey Phillips saw significant declines following the announcement, reflecting investor concerns over sales and profit margins.

Why It Matters: Tobacco and paan masala to get costlier from Feb 1; new cess replaces old, hits company shares.