By 5paisa 20 Feb 2025
India is considering raising GST on cigarettes and tobacco products to 40% after the compensation cess ends in March 2026, ensuring stable tax revenues.
ITC, India’s largest cigarette manufacturer, could face higher taxation impact as tobacco contributes a major share of its revenue, affecting profitability.
Cigarette makers VST Industries and Godfrey Phillips may see margin pressure if the tax burden rises, leading to possible price hikes.
The government may introduce a ‘health cess’ instead of the compensation cess, though some states oppose additional levies on tobacco products.
Tobacco stocks could face short-term volatility, but companies may pass tax hikes to consumers, ensuring revenue stability despite increased taxation.
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