Shares of ITC Ltd fell sharply on Thursday, slipping to their lowest level in around 33 months, after the central government announced a fresh excise duty on cigarettes. The stock declined over 4% during intraday trade, making it one of the top laggards on benchmark indices.
The fall followed a government notification introducing a specific excise duty on cigarettes, which will come into effect from February 1, 2026.
Under the new structure, cigarette excise duty will be charged based on length, with rates ranging from ₹2,050 to ₹8,500 per 1,000 sticks. The excise duty will be levied in addition to the existing 40% goods and services tax (GST) on tobacco products.
The new levy replaces the current compensation cess regime, which is scheduled to end in January.
ITC, which earns a substantial portion of its revenue from cigarette sales, saw sustained selling pressure throughout the trading session. The stock touched levels last seen in April 2023.
Other tobacco stocks also declined. Shares of Godfrey Phillips India fell sharply, reflecting broader concerns across the sector following the tax announcement.
Market participants are closely tracking how cigarette manufacturers respond to the higher tax burden, including potential price increases and their impact on demand volumes. The revised excise duty framework will take effect at the start of the next financial cycle.
