Government's New Levies Shake Tobacco Stocks

Tobacco and pan masala stocks saw significant drops as the government announced new excise duties and a health cess effective February 1. These will replace the current compensation cess and come in addition to the GST hike on these products.

In a significant move set to impact the market, the government has announced that starting February 1, additional excise duties and a health cess will be imposed on tobacco products and pan masala. This new levy is in addition to the existing GST on these 'sin goods'.

The financial markets reacted swiftly to the news, with shares of major tobacco companies taking a hit. Godfrey Phillips India saw its stock plunge by 10 per cent, while ITC experienced a 6.11 per cent drop on the BSE, underscoring investor concerns over the financial impact of these measures.

Under the new tax regime, tobacco and similar products will face a GST rate of 40 per cent, while 'beedis' are set at 18 per cent. Furthermore, the finance ministry has rolled out new rules for chewing tobacco and related products as part of its comprehensive strategy to regulate the sector.

(With inputs from agencies.)