Tobacco Stocks Fall as Government Weighs New Cigarette Cess Under Fresh Policy Framework

Market Performance: Tobacco Stocks See Early Pressure

The trading session opened with noticeable weakness across tobacco counters. The mood around the sector turned cautious as reports pointed to fresh proposals around a new cigarette cess and revised excise duties.

In the middle of a quiet market morning, this update pulled attention straight toward tobacco names and pushed the tobacco stocks' fall theme into focus.

On the exchanges:

• ITC share price today: down 0.85% at ₹400.8
• Godfrey Phillips share price today: down 1.05% at ₹2,842.90
• VST Industries share price today: slightly higher at ₹255.25

Even a mild uptick in one stock could not offset the broader pressure that swept across the segment.

Main News: Government Explores New Cess and Excise Structure for Cigarette & Tobacco Products

The sector reacted sharply after reports suggested that the government is evaluating a new cess structure on cigarettes and tobacco products.

The proposal appears to be part of a broader “Health Security and National Security” framework, aimed at restructuring levies across specific categories.

According to the reported details, the cess may fall within a wide range, depending on cigarette length and format:

• ₹2,700–11,000 per 1,000 cigarettes
• ₹3,000 per 1,000 cigarettes for filter sticks up to 65mm
• ₹4,500 per 1,000 cigarettes for 65–70mm sticks
• 25% cess proposed on cigars and cheroots
• Pan masala sector: cess linked to machine capacity

While discussions are still at the proposal stage, the numbers alone were enough to weigh on sentiment and keep tobacco stocks on the back foot.

Company Details: Broader Policy Moves in Spotlight

The new cess conversation comes at a time when the government is preparing to table two important bills:

• Central Excise Amendment Bill, 2025
  • Designed to replace the current GST compensation cess on products such as cigarettes, chewing tobacco, cigars, zarda, hookah and related tobacco items.
  • Allows greater fiscal flexibility once the compensation cess mechanism ends.
• Health Security and National Security Cess Bill, 2025
  • Aims to introduce a specific cess on the production of selected goods, including pan masala.
  • Could reshape the tax framework for multiple industries under this umbrella.

Tobacco stocks have historically been sensitive to tax-related changes, and this announcement was no exception. Every detail—whether it relates to cigarette cess slabs or excise duty adjustments—tends to flow straight into market sentiment.

Summary: Why Tobacco Stocks Fell Today

The weakness in tobacco stocks came largely from the sudden clarity around potential tobacco cess revisions and excise restructuring.

With cess proposals ranging from ₹2,700 to ₹11,000 per 1,000 cigarettes, and additional levies being considered for cigars, cheroots and pan masala, the sector saw immediate impact.

For now, the market is pricing the news as it unfolds, while traders track how both bills progress and what they may mean for the broader tobacco tax landscape.