Shares of ITC Ltd witnessed a sharp sell-off on Thursday, January 1, plunging nearly 10% intraday to hit their lowest level in almost three years, after the government announced a steep excise duty hike on cigarettes and tobacco products, effective February 1, 2026.
According to a late-evening notification issued by the Finance Ministry, cigarettes will attract an excise duty ranging between ₹2,050 and ₹8,500 per 1,000 sticks, depending on product length. This levy will be over and above the higher GST rate of 40% that will also apply to cigarettes, tobacco and related products from February.
Following the announcement, ITC shares fell to an intraday low of ₹362.70, marking their weakest level since January 30, 2023. The stock also emerged as the biggest loser on the Sensex, recording its steepest single-day fall since 2020, according to market data.
A Bloomberg report citing Jefferies noted that the combined impact of the new excise duty and existing levies could translate into an effective tax increase of over 30%, assuming the National Calamity Contingent Duty continues. Such a sharp rise in taxation is expected to exert pressure on cigarette pricing and near-term volumes.
The decline was not limited to ITC alone. Godfrey Phillips India, which manufactures cigarette brands such as Marlboro and Four Square, slumped as much as 19% intraday, reflecting broad-based pressure across tobacco stocks.
ITC, which sells popular cigarette brands including Classic and Gold Flake, has already seen its stock underperform over the past year. As of the latest session, ITC shares are down around 24% year-on-year and nearly 12% over the last six months, amid regulatory overhangs and recurring tax-related concerns surrounding the tobacco business.
Disclaimer
This news article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Stock market investments are subject to market risks. Readers are advised to consult certified financial advisors before making any investment decisions.
