Indian Tobacco Stocks fell on Thursday, January 1, 2026, after the Centre announced that additional excise duty will start on February 1 for tobacco products and a new tax on pan masala.
At 10:15 PM, ITC shares dropped 5.83 %, Godfrey Phillips India declined 9.94 %, and VST Industries fell 0.56 %.
Indian Tobacco Stocks falls 6%
During the day, ITC stock reached a 52-week low, dropping 6 %; Godfrey Phillips fell 9.3 %, and VST Industries was down 1.5 %. In addition, a Health and National Security tax will apply to pan masala, while other tobacco products will face new excise duties. The Finance Ministry also announced the Chewing Tobacco, Jarda Scented Tobacco, and Gutkha Packing Machines (Capacity Determination and Collection of Duty) Rules, 2026.
In December, Parliament approved two Bills that permit the new Health and National Security tax on pan masala production and excise duty on tobacco.
The government set February 1 as the date for these new levies to take effect. The existing GST compensation tax, which currently has varying rates, will end on that date.
Tax levied range from ₹2,050 to ₹8,500 per 1,000 sticks
ICICI Securities estimates the proposed excise duty on cigarettes will range from ₹2,050 to ₹8,500 per 1,000 sticks on basis of length and filter type. Cigarettes up to 65mm are expected to be in the lowest tax bracket, while those longer than 75mm will face the highest rate.
Under the new structure, the excise tax on cigarettes up to 65mm may either decrease or remain the same. In contrast, cigarettes of 75mm or longer could see a tax increase of 48 to 50 %. This could result in a 22 to 28 % rise in overall costs for the 75 to 85mm segment.
Read also: 7 Dead in Indore After Consuming Contaminated Water; 2 Civic Officials Suspended