The shares of ITC and Godfrey Phillips India (major cigarette manufacturers in India) are in focus on February 1, 2026

The shares of !ITC and

Phillips India (major cigarette manufacturers in India) are in focus on February 1, 2026, as the new excise duty regime on cigarettes takes effect today. This follows the government's notification and the passage of the Central Excise (Amendment) Bill, 2025 in December 2025, which restructured tobacco taxation to replace previous temporary levies and compensation cess mechanisms. Key Changes Effective February 1, 2026 Cigarettes now attract an additional specific excise duty (on top of the existing 40% GST rate). The excise duty ranges from Rs 2,050 to Rs 8,500 per 1,000 sticks, depending on cigarette length and type (e.g., shorter non-filter cigarettes around Rs 2.05 per stick, longer premium ones higher). This replaces the prior GST compensation cess structure, aiming to maintain or increase overall tax burden on tobacco products while providing fiscal flexibility. The move targets "sin goods" like cigarettes and pan masala, with additional health/national security cess elements in some cases. Analysts expect retail cigarette prices to rise by 15-40% (or Rs 2-3 per stick in many segments), potentially impacting volumes due to affordability concerns, especially in longer/premium segments (which form a notable portion of sales for companies like ITC).