Cigarette Prices Steady as No Tobacco Tax Increase Announced in Budget 2024

In a surprising turn of events, cigarette prices are set to remain stable following the 2024 Union Budget announcement, which revealed that there will be no increase in tobacco taxes. This decision has been warmly welcomed by ITC, India’s largest cigarette manufacturer, leading to a notable rise in its stock value. ITC shares climbed by up to 5% today, trading at Rs 488.35 on the National Stock Exchange (NSE).

The taxation of tobacco products is managed by the Goods and Services Tax (GST) Council, with additional levies including the National Calamity Contingent Duty (NCCD), which can be adjusted during the Union Budget. Finance Minister Nirmala Sitharaman’s Budget address did not propose any changes to the existing tobacco tax rates, which were last increased by 16% in the previous year.

Tobacco products are a crucial revenue stream for ITC, contributing over 80% to its net profit and approximately 45% of its total revenue. Historically, ITC’s stock has shown positive performance on Budget Day, despite changes to the NCCD tax in previous years.

Today, ITC’s stock began trading at Rs 467.05 per share on the Bombay Stock Exchange (BSE), reaching a high of Rs 489.80 and a low of Rs 466.55 during intraday trading.