The sharp rise follows media reports indicating that companies have raised prices to pass on higher costs to consumers. The price hikes are aimed at offsetting the recent excise duty increase, reducing the expected EBIT decline to around 2%, compared with earlier estimates of 8–15%.
Godfrey Phillips India has raised the price of Marlboro Compact from Rs 9.5 per stick to Rs 11.5 per stick, according to a news report. ITC is likely to raise cigarette prices by 20–40% across brands, with fresh shipments expected to reach the market soon. Retailers are also selling existing inventory at higher prices.
These developments follow the government’s notification ending the GST compensation cess and rolling out a new tobacco tax regime on February 1, as reported by ETNow.
Under the new framework, excise duties on cigarettes were restructured to a range of Rs 2,050 to Rs 8,500 per 1,000 sticks, alongside a 40% GST. This has materially raised the overall tax burden on cigarettes, triggering concerns over demand, margins, and the risk of increased illicit trade.
Adding to the unease is a technical change in the National Calamity Contingent Duty (NCCD) announced in the Budget.
The government raised the statutory NCCD rate on tobacco products from 25% to 60%, with effect from May 1, 2026. However, the Budget also clarified that the effective duty rate will continue at 25% through a notification, meaning there is no immediate increase in tax outgo for cigarette companies. In simple terms, this is not a tax hike today, but a future enabling provision. The government has created room to raise the duty later without changing the law again.Despite the recent rally, Godfrey Phillips share price is down over 10% since the beginning of the year. ITC, India’s largest cigarette maker, saw its share price edge marginally lower on February 19. VST Industries, on the other hand, rose 0.3%.
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