ITC Share: Friends, if you follow the stock market, today was a tough day for investors in the tobacco sector. At the start of the new year, leading stocks like ITC Ltd, Godfrey Phillips India, and VST Industries saw a decline for the second consecutive day.

The main reason for this is believed to be the government’s decision to impose additional excise duty on cigarettes and tobacco products.

ITC and other shares fall as excise duty increases

On Friday, January 2nd, in early trading, ITC shares fell by nearly 5 percent to around ₹345. Godfrey Phillips shares also saw a decline of more than 3 percent, and VST Industries also traded in the red. This market reaction clearly shows that investors have become cautious about the new tax regime.

ITC Share Price: New tax system to be implemented from February 2026

The government has clarified that the additional excise duty on cigarettes and other tobacco products will be implemented from February 1st. This duty is determined based on the length of the cigarette and will be levied on top of the 40 percent GST. This means that cigarette prices are bound to be directly affected in the coming days. The tax burden has been increased most significantly on longer and premium cigarettes.

How much more expensive will cigarettes become under the new tax structure?

Under the new system, small non-filter cigarettes will attract an additional tax of approximately ₹2 per stick, while the burden will be even higher on medium and long cigarettes. Premium category cigarettes could see an additional tax of more than ₹5 per stick. However, the government has clarified that only the rarely used “other” category will fall into the highest tax bracket.

ITC Share Price: Strict measures also for pan masala and gutkha

The government has increased stringency not only on cigarettes but also on pan masala and chewing tobacco. From February, these products will be subject to a heavy excise duty and cess in addition to the 40 percent GST. In addition, it has been made mandatory to install CCTV cameras on packing machines in factories and to securely store the recordings for extended periods, to curb illegal production.

ITC Share Price: Why did the government increase taxes?

According to government sources, the aim of this tax increase is to align the tax on cigarettes with their impact on public health. The tax on cigarettes had remained almost constant for the past seven years, while internationally, it is recommended to increase taxes annually. According to WHO standards, the tax on cigarettes in India is still lower than the global average.

Tobacco industry expresses displeasure

Organizations associated with the tobacco industry say that such a large tax increase will encourage illegal and smuggled cigarettes. The industry believes that this will also negatively impact farmers, small businesses, and the retail network. They claim that the government should reconsider this decision.

What are analysts saying about ITC?

Brokerage houses believe that this tax increase could impact ITC’s sales and profits. Several analysts say that the company will have to increase prices, which could lead some customers to switch to cheaper or illegal cigarettes. However, ITC’s track record shows that the company has overcome similar situations before, but the stock may remain under pressure for the next few months.

ITC Share Price: What does this mean for investors

Overall, there is currently an atmosphere of uncertainty in the tobacco sector. It will take time to fully understand the impact of the new tax regime, and until then, the stocks may remain volatile. It is important for investors not to make decisions based on emotions and to proceed with a long-term strategy.

The decline in ITC and other tobacco stocks has made it clear how deeply tax-related policies affect the stock market. In the coming months, it will be interesting to see how companies deal with this challenge and how the market reacts.

Disclaimer: This article is for informational purposes only. The information provided should not be considered investment advice. Investing in the stock market involves risk, so please consult your financial advisor before making any investment decisions.

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