Shares of cigarette and tobacco makers fell sharply on Thursday morning trade after the government announced new taxes starting February 1. Godfrey Phillips India shares dropped 10%, while ITC shares fell 6.11% on the BSE. The government will levy additional excise duty on tobacco products and a health cess on pan masala, over and above the existing GST rates. These new charges will replace the current compensation cess on such 'sin goods'. According to the notification, from February 1, pan masala, cigarettes, tobacco, and similar products will attract a 40% GST rate. The lower 'beedi' category will have an 18% GST. On top of this, a Health and National Security Cess will be applied to pan masala, and tobacco products will face extra excise duty. On December 31, 2025, the Finance Ministry also issued rules for duty collection on chewing tobacco, jarda scented tobacco, and gutkha packing machines for 2026. This move aims to boost government revenue and regulate production.