Tobacco stocks mixed, ITC in green as govt tables excise, cess bills; Rs 2,700-11,000 per 1,000 sticks levy on cigarettes

Tobacco stocks were trading mixed on Monday after Finance Minister Nirmala Sitharaman tabled the Central Excise (Amendment) Bill, 2025, and the ‘Health Security se National Security’ Cess Bill, 2025, in Parliament, setting out the proposed tax framework for cigarettes, tobacco products and pan masala manufacturing.

Around noon, ITC shares traded at Rs 404.65, up 0.1 percent, reversing earlier losses from the morning session. Godfrey Phillips India fell 1.2 percent to Rs 2,840.00, while VST Industries was marginally higher at Rs 254.90.

The government has reportedly proposed excise duty bands on cigarettes by stick length. The proposal includes a levy of Rs 2,700-11,000 per 1,000 cigarettes: Rs 3,000 per 1,000 cigarettes suggested for up to 65 mm filter sticks; and Rs 4,500 per 1,000 cigarettes for 65-70 mm sticks. A 25 percent duty is also proposed on cigars, cheroots and chewing tobacco. For the pan masala sector, the cess could apply based on machine capacity.

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According to earlier reports, the Central Excise Amendment Bill, 2025, aims to replace the GST compensation cess currently levied on cigarettes, chewing tobacco, cigars, zarda, hookah and other tobacco products. The legislation seeks to give the Centre fiscal room to raise excise duties once the GST compensation mechanism ends.

Meanwhile, the ‘Health Security se National Security’ Cess Bill, 2025 proposes a cess on manufacturing of pan masala , to be levied on a machine-capacity basis. This will introduce a new tax structure for pan masala producers, independent of cigarette taxation.

ICICI Securities said the government has indicated no major change in the overall tax burden at this stage, adding that the proposal appears broadly tax-neutral for ITC and other cigarette manufacturers. Tobacco stocks remain sensitive to policy announcements, and investors are watching closely for further detail as both bills progress through Parliament.