Global Markets
Home›Global Markets›India›Cigarette makers seen seeing margin recovery in Q2 aft…
Cigarette makers seen seeing margin recovery in Q2 after India tax shift
Analysts say the move to a uniform 40% GST slab plus higher additional excise duties from ₹2,050 to ₹8,500 per 1,000 sticks should leave room for price increases to flow through.
Indian tobacco and cigarette manufacturers, including ITC, Godfrey Phillips India, and VST Industries, saw margin pressure in Q1 after a structural change in India’s cigarette tax regime, according to LiveMint Markets.
The earlier tax framework of 28% GST plus variable Compensation Cess has been replaced by a uniform 40% GST slab, alongside higher length-based Additional Excise Duties of ₹2,050 to ₹8,500 per 1,000 sticks.
LiveMint Markets also notes that NCCD continues to apply and that the valuation framework has shifted to mandatory MRP-based calculations.
Analysts expect some sequential margin improvement in Q2 FY27, saying companies now have more time to implement price increases and pass higher taxes on to consumers.