Archive · 3 Jan 2026
Government Hikes Tobacco Taxes, Sparking Industry Concerns
The Indian government has increased the taxes on tobacco products, which will make cigarettes more expensive starting from February 1, 2026.
This tax hike has caused concern among tobacco companies like ITC and Godfrey Phillips, as their stock prices have dropped significantly.
The Federation of All India Farmer Associations (FAIFA) is worried that the higher taxes will make legal tobacco products too expensive, leading people to buy illegal tobacco instead.
This could hurt farmers who grow tobacco because there might be less demand for their crops.
The government says the higher taxes are meant to discourage tobacco use and increase revenue, but the industry is worried about the negative effects on their businesses and the farmers.
The Indian government has increased excise duty on tobacco products, effective February 1, 2026.
The new excise duty ranges from Rs 2,050 to Rs 8,500 per 1,000 sticks, in addition to a 40% GST.
ITC Ltd and Godfrey Phillips India Ltd shares have dropped significantly due to the tax hike.
FAIFA argues that high taxes will make legal tobacco products unaffordable, driving consumers to illegal channels.
The tax hike is expected to impact ITC's cigarette volumes and earnings, with concerns about illicit cigarette market growth.
- Who
- Indian Government, Federation of All India Farmer Associations (FAIFA), ITC Ltd, Godfrey Phillips India Ltd, Life Insurance Corporation of India (LIC)
- What
- Government hikes excise duty on tobacco products, leading to industry concerns and stock price drops
- When
- Effective February 1, 2026
- Where
- India
- Why
- To increase revenue and discourage tobacco use, but industry fears negative impacts on sales and farmers
- Organization
- Federation of All India Farmer Associations (FAIFA)
- Tax Hike Effective Date
- February 1, 2026
- Excise Duty Range
- Rs 2,050-Rs 8,500 per 1,000 sticks
- GST Rate on Tobacco
- 40% of retail sales price
- WHO Affordability Index
- India's legal cigarette prices among least affordable globally
- ITC Share Price Drop
- 10% drop in two days
- LIC's Stake in ITC
- 15.86%
- LIC's Notional Loss
- Rs 11,000 crore in two days
Sources
FAIFA urges government to roll back steep tax hike on tobacco products
India's Largest Cigarette Maker ITC Plunges 10% After Tobacco Tax Hike
Cigarettes to get pricier as govt hikes excise duty — how much will you have to pay for smoking?
ITC stock: LIC loses Rs 11K cr notionally in 2 days on cigarette excise duty hike
Godfrey Phillips shares extend fall; key technical levels in focus
New tobacco excise hike draws farmer ire as FAIFA warns of demand hit, smuggling
Excise duty hike on tobacco may hit farmers, fuel illicit trade: FAIFA
FAIFA seeks rollback of steep tax hike on tobacco products
FAIFA Raises Alarm Over Sharp Price Hike of Finished Goods
FAIFA Raises Alarm Over Sharp Price Hike of Finished Goods: Warns of Severe Impact on Farmers
FAIFA Flags Sharp Hike In Excise Duty On Tobacco Products
