Overview
- Finance Ministry notifications set a specific excise of ₹2,050–₹8,500 per 1,000 sticks by length from February 1, charged over a 40% GST rate on tobacco.
- A Health and National Security Cess will hit pan masala on a capacity basis, with new machine‑capacity rules, CCTV mandates and MRP‑based valuation for smokeless tobacco.
- Markets repriced the sector sharply as ITC fell roughly 6–10% intraday to multi‑month lows and Godfrey Phillips slid about 10–17% after the announcement.
- Brokerage estimates point to retail increases of about 20–30% in many segments, with 75–85 mm sticks facing cost inflation of roughly 22–28% and potential ₹2–3 per‑stick hikes.
- The Tobacco Institute of India warned of illicit‑trade gains and urged a review, while officials framed the reset as aligning taxes with global norms after the compensation cess wind‑down.