Cigarettes may become up to 17% more expensive in May:ITC and Godfrey Phillips shares surge up to 7%

Smoking cigarettes in the country may become expensive from next month. According to a report, major cigarette companies like ITC and Godfrey Phillips may increase prices by up to 17% in May. Following this news, shares of these companies surged by up to 6.5% on Wednesday, April 29. Prices may increase by ₹20 in May Based on distributor feedback and channel checks, an NDTV Profit report stated that the price change will not be limited to premium products only. Companies may also increase prices of value-end brands (cheaper cigarettes). For example, the price of one packet of ITC’s Gold Flake Premium may increase from ₹115 to around ₹135 in May 2026. Cigarette companies’ dominance in the market On April 29, ITC’s share closed with a gain of about 4% and Godfrey Phillips’ share with a gain of 7%. The Nifty FMCG Index also saw a 2% surge, with ITC leading the way. According to Vinod Nair, Head of Research at Geojit Investments, cigarette companies have good pricing power. This enables them to successfully protect their profits despite tax increases. Costs Increased Due to Excise Duty Hike Earlier this year, Parliament approved the Central Excise (Amendment) Bill, 2025. Under this, duty on cigarettes and tobacco products has been increased. According to this rule effective from February 1, excise duty ranging from ₹2,050 to ₹8,500 per 1,000 sticks has been imposed based on the length of cigarettes. This duty is in addition to 40% GST. 22-28% Increase in Cost of Longer Cigarettes Analysts at ICICI Securities say that the total cost of cigarettes which are 75-85 mm long has increased by 22-28%. Cigarettes longer than 75 mm account for approximately 16% of ITC’s total sales. Due to the new levy, the price of such cigarettes may increase from ₹2 to ₹3 per stick (one cigarette). Experts believe that the increased prices may have a temporary impact on sales, but in the long term, companies will maintain profitability. What are Excise Duty and Levy?