Tobacco shares plunge on higher excise duty from Feb

Mumbai: Shares of major cigarette makers fell sharply on Thursday after the government announced to slap a fresh excise duty on cigarettes next month, a move that is expected to push up prices and impact sales. Stocks of ITC and Godfrey Phillips dropped by as much as 19 per cent during the intra-day’s trade on Thursday.

According to a government order, the new excise duty will come into effect from February 1. The duty has been fixed in the range of Rs 2,050 to Rs 8,500 per thousand cigarette sticks, depending on the length of the cigarettes.

This additional tax is likely to make cigarettes more expensive, which could hurt demand and weigh on the earnings of cigarette companies.