Shares of cigarette and tobacco product makers came under sharp pressure in Thursday morning trade after fresh levies on tobacco products and pan masala were announced, triggering heavy selling across the sector.Sharp Decline in Key Tobacco Stocks
The stock of Godfrey Phillips India plunged 10 percent, while ITC slipped 6.11 percent on the BSE, reflecting investor concerns over the impact of higher taxation on demand and margins.New Levies to Take Effect From February 1
The newly announced charges will come into force from February 1 and will apply in addition to the existing Goods and Services Tax framework. These levies are set to replace the compensation cess currently applicable on tobacco products and other sin goods.From the effective date, pan masala, cigarettes, tobacco, and similar products will attract a GST rate of 40 percent, while beedi will be taxed at 18 percent. In addition, a Health and National Security Cess will be imposed on pan masala, and tobacco and related products will face an extra excise duty.
Sector Reacts to Higher Tax Burden
The market reaction highlights concerns that the increased tax burden could weigh on consumption trends and profitability for tobacco companies. With the new tax structure nearing implementation, investors appeared cautious, leading to broad-based selling in cigarette and tobacco stocks during early trade.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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