ITC, Godfrey, VST: Cigarettes Cost Alert: This New Bill To Bring New Excise Duty, Cess On Tobacco, Pan Masala?

Cigarettes stocks are back in the limelight as the winter Parliament session begins from December 1st onward. One of the major bill that could be discussed in Lok Sabha, is the Central Excise (Amendment) Bill which is likely to replace GST cess on tobacco, pan masala and gutkhas and other tobacco-related products. These products fall under sin goods and the bill proposes to impose excise duty on these items. Hence, the cost of cigarettes are expected to rise ahead if the bill is approved and comes into effect by 2026, which will be a drawback of tobacco companies.

As per the official X handle of Lok Sabha, the Central Excise (Amendment) Bill, 2025' and 'The Health Security se National Security Cess Bill, 2025' are introduced in Lok Sabha on December 1st.

What Is Central Excise (Amendment) Bill, 2025'?

The Finance Minister Nirmala Sitharaman introduced the bill on Monday. It is expected to replace GST compensation cess on all tobacco products like cigarettes, chewing tobacco, cigars, hookahs, zarda, and scented tobacco.

As per PTI report, the bill seeks "to give the government the fiscal space to increase the rate of central excise duty on tobacco and tobacco products so as to protect tax incidence," once the GST compensation cess ends, according to the statement of objects and reasons of the bill.

Currently, sin goods such as tobacco and pan masala face 28% GST rate along with compensation cess which varies from city to city.

If the new bill is approved, it will lead to excise duty on cigars/cheroots/cigarettes reportedly in the range of Rs 5,000-Rs 11,000 per 1,000 sticks. Further, the bill could levy about 60-70% on unmanufactured tobacco and 100% on nicotine and inhalation products.

At present, cigarettes see 5% compensation cess ad valorem along with an Rs 2,076-3,668 per 1,000 sticks cess, based on the length.

The report stated that once the compensation cess ends, there could be 40% GST plus excise duty on sale of tobacco and related products. Meanwhile, a 40% GST plus the Health Security se National Security Cess is imposed on sale of pan masala.

Top Cigarette Companies:

As per a data on Screener in July 2025, ITC is the leader in the cigarette market of India, with an estimated 75% market share, followed by Godfrey Phillips which has a 10% market share. Not too far is VST Industries at the third position with 9% share. The other category holds 6% market share in the industry.

Major Brands Of Top Cigarette Companies:

ITC: Gold Flake, Classic, Navy Cut, Scissors.

Godfrey Phillips: Marlboro, Four Square, Red & White

VST Industries: Charms, Charminar, Total & Special

ITC Share Price:

Amidst the buzz related to Central Excise (Amendment) Bill, ITC share price witnessed a volatile performance. The FMCG stock dropped by at least 1.5% to hit an intraday low of Rs 398.30 apiece before recovering losses. After market hours, the large-cap stock closed at Rs 404.40 apiece on BSE, flat compared to previous session. Its market cap stood at Rs 5,06,663.24 crore.

Apart from the cigarette business, ITC is one of India's foremost conglomerates with businesses spanning Fast Moving Consumer Goods (FMCG), Paperboards and Packaging, Agri Business and Information Technology.

Godfrey Phillips Share Price:

Unlike ITC, Godfrey Phillips stock dropped by 1.2% to end at Rs 2837.90 apiece on BSE, with market cap of Rs 44,266.06 crore. Its return on equity ratio is at 30.93%.

Godfrey Phillips India Limited (GPIL), flagship company of Modi Enterprises, and one of the largest FMCG companies in India has been producing some of the most popular cigarette brands in the country. GPIL also manufactures and distributes iconic brand Marlboro under a license agreement with Philip Morris.

VST Industries Share Price:

VST also ended marginally up by 0.20% to Rs 254.80 apiece on BSE, with market cap of Rs 4,328.06 crore. Its return on equity ratio stood at 26.89%.

The Company has a manufacturing facility at Hyderabad and Toopran (Telangana) and its principal activities are manufacture & sale of cigarettes and unmanufactured tobacco.