Cigarette Prices to Rise From February 1 in India; Check New Excise Duty Rates as ITC and Godfrey Phillips Stocks Plunge
India will reportedly raise cigarette prices from February 1, 2026, after the government notified an additional excise duty on cigarettes, replacing the compensation cess. The move triggered sharp declines in tobacco stocks, with ITC and Godfrey Phillips falling on the NSE. The excise duty will apply alongside the existing 40 per cent GST.
New Delhi, 1 January: The Indian government has notified an additional excise duty on cigarettes, a move that will lead to higher cigarette prices in India from 1 February 2026. The decision triggered sharp selling in tobacco stocks during the first trading session of the New Year, with ITC Ltd. emerging among the top losers on the Nifty 50 index.
Cigarette Excise Duty Hike Details
According to the Finance Ministry notification, cigarettes will attract an additional excise duty ranging from INR 2,050 to INR 8,500 per 1,000 sticks, depending on cigarette length. This levy will be imposed in addition to the existing 40 per cent Goods and Services Tax (GST) on tobacco products. The new duty replaces the earlier compensation cess that was levied on cigarettes. Adani Power Share Price Today, January 1, 2026: Stocks of Adani Power Limited Rise by 5.12% in Early Trade on New Year’s Day; Check Latest Price on NSE.
Cigarette, Gutkha Prices Set To Rise From Feb As Govt Hikes Excise Duties
Impact on Cigarette Prices in India
The excise duty hike is expected to result in a cigarette prices increase in 2026, with analysts estimating higher retail prices across categories once the new tax comes into effect from February.
ITC Share and Tobacco Stocks React
Following the announcement, ITC share price declined sharply in early trade on the NSE. Shares of Godfrey Phillips India also fell, reflecting investor concerns over higher taxation on tobacco products. Other tobacco stocks showed mixed movement. ITC Share Price Today, January 1, 2026: Stocks of FMCG Giant Plunge Over 9% in Early Trade; Here is Why ITC Share is Falling Today.
Government’s Policy Objective
The government said the move aims to ensure tobacco products do not become more affordable over time. Officials noted that tobacco taxes in India currently account for about 53 per cent of retail prices, which is below the World Health Organisation’s recommended level of 75 per cent. The government also confirmed there will be no change in tax incidence on beedis
(The above story first appeared on LatestLY on Jan 01, 2026 12:46 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).