Tobacco shares slip almost 9% after reports of GST increase on products; check key details

Shares of tobacco makers tumbled almost 4% during the morning trade on Thursday, February 20, amid reports of GST increasing on cigarettes and tobacco products.

At close, ITC closed at ₹402.20 apiece on BSE, losing 1.06%. Godfrey Phillips plunged 9.02% to settle at ₹5,968.55 while VST Industries tanked 3.67% to end at ₹288.60 on BSE. Indian Wood Products declined 1.30% to close at ₹45.40 apiece.

During the intraday trade, shares of ITC tumbled as much as 1.56% at ₹400.15 apiece on BSE. Meanwhile, shares of the Four-Square maker Godfrey Phillips slipped 4.17% at 10:14 AM to ₹6,286.90 apiece on BSE. Charminar-maker VST Industries was trading at ₹289.55, declining 3.35%. Another tobacco firm, Indian Wood Products, shares also slumped 3% to ₹44.62 during the morning trade.

Cigarettes and other tobacco products currently face a GST of 28% besides the cess and other levies, taking the total indirect tax to 53%. One of the suggestions being explored is to raise the GST to the highest permissible 40% and top that with an additional excise duty. According to the report, an official said that the idea is to ensure that the tax revenue on these products does not fall once levying of the compensation cess ends, now scheduled for March 31, 2026. The government is not keen to replace the compensation cess with another cess.

In the Union Budget 2025, Finance Minister Nirmala Sitharaman did not announce any new taxes on tobacco or cigarette-related products.

Considered sin goods, cigarettes and other smokeless tobacco products currently face the compensation cess, basic excise duty and the National Calamity Contingent Duty besides GST at 28%.

But even the overall taxation of 53% – GST plus other levies – on cigarettes is still way below the 75% rate recommended by the World Health Organisation.