Tobacco, gaming industries brace for Budget day announcements

Rumors suggest that excise duty or NCCD duty on cigarettes and other tobacco products might see an increase.

Finance Ministers often have the reputation of giving with one hand while taking with the other. The upcoming Budget brings hopes of revised tax brackets and benefits for the middle class. However, there is a concern that the government may demand something in return, such as increased taxes on cigarettes and no relief for the gaming industry.

While the main focus will likely be on infrastructure, manufacturing, and consumption-related announcements, some experts are keenly observing what Finance Minister Nirmala Sitharaman’s first post-election Budget might offer for the liquor, tobacco, and gaming sectors.

Rumors suggest that excise duty or NCCD duty on cigarettes and other tobacco products might see an increase. For the alcohol industry, a more uniform tax structure across states, combined with investments in initiatives for responsible consumption, could unlock the sector’s full potential, according to Tushar Bhandari of Associated Alcohols and Breweries.

He also noted that targeted support, such as streamlined licensing processes or other pro-innovation measures, would greatly encourage entrepreneurship and creativity in this sector.

Last month, gaming company shares surged on speculation that the GST Council might adopt a lenient stance on taxing their income. The online gaming industry has been lobbying for a 28 percent GST on gross gaming revenue (GGR) rather than on the total amount deposited by players.

Roland Landers of the All India Gaming Federation stated that clear GST regulations would foster growth, create a favorable business environment, and restore investor confidence in the sector, making gaming a key component of Digital India. However, the Council's recent meeting ended without providing the anticipated relief, disappointing the industry.

Key tobacco companies such as ITC, Godfrey Phillip, and VST Industries will be closely watched on Budget day for any announcements on excise duty. Domestic brokerage Motilal Oswal, however, believes that fears of an excise duty hike may be unwarranted. Motilal Oswal commented that stable macroeconomic conditions and government initiatives, such as maintaining steady taxes and controlling illegal cigarettes, are expected to support ITC’s volume growth.

In the gaming sector, Nazara Tech and Delta Corp will be significant movers if there are any changes in the taxation structure.