The 2024 Union Budget brought good news for the tobacco industry as the government decided not to increase the existing tax rates on tobacco products. This decision was particularly welcomed by ITC, India’s largest cigarette manufacturer, whose shares soared by as much as 5 percent following the announcement. By the end of the trading session, ITC’s stock was up 4.67 percent, closing at ₹488.35 on the National Stock Exchange (NSE).
Taxation on tobacco products is primarily governed by the Goods and Services Tax (GST) Council. However, the central government also levies a National Calamity Contingent Duty (NCCD) on cigarettes, which can be adjusted during the Union Budget. In her recent Budget address, Finance Minister Nirmala Sitharaman opted to keep the tobacco tax rates unchanged, maintaining the status quo established after a 16 percent hike in NCCD the previous year.
Cigarettes are a critical revenue source for ITC, accounting for over 80 percent of the company’s net profit and approximately 45 percent of its total revenue. The Economic Times reported that ITC shares have consistently shown positive returns on Budget Day over the past decade, despite numerous changes to the NCCD tax.
On the Bombay Stock Exchange (BSE), ITC’s stock opened at ₹467.05 per share, reaching an intraday high of ₹489.80 and a low of ₹466.55. The stable tax environment provided by the latest Union Budget has further solidified investor confidence in ITC, reflecting in the company’s robust stock performance.
