The price of cigarettes will remain unchanged after the government announced no hike in the existing tax rates on tobacco products in the 2024 Union Budget. This came as a welcome move by ITC, India’s biggest cigarette producer, whose shares surged as much as 5 per cent. The stock was last seen trading 4.67% higher at Rs 488.35 on the National Stock Exchange (NSE).
Taxation of tobacco products primarily falls under the jurisdiction of the Goods and Services Tax (GST) Council, although the central government also imposes a National Calamity Contingent Duty (NCCD) on cigarettes, which is subject to adjustments during the Union Budget. In her recent Budget address, Finance Minister Nirmala Sitharaman chose not to increase tobacco taxes, maintaining the rates that were last altered with a 16 per cent hike in NCCD the previous year.
Cigarettes are a major revenue driver for ITC, contributing more than 80 per cent of the company’s net profit and about 45 per cent of its total revenue. According to a report by the Economic Times, ITC shares have consistently posted positive returns on Budget Day over the past decade, even amid several tweaks in the NCCD tax.
ITC’s stock price opened at Rs 467.05 per share on the Bombay Stock Exchange (BSE) today, reaching an intraday high of Rs 489.80 and a low of Rs 466.55.
