Cigarette, gaming stocks under pressure today as government may impose 40% GST on them

August 18, 2025: Stocks of many cigarette, tobacco and gaming companies are in red today. This, after reports that the government may impose 40% GST on tobacco and other products, that are classified as sin products.

At 11: 40 a.m. Indian Standard Time, 18^th August, 2025, Godfrey Phillips India’s stock price is down by 4.98%, trading at Rs 9,675.50. ITC’s stock price is down by 0.67%, trading at Rs 408.70. Delta Corp’s stock price is down by 1.48%, trading at Rs 83.95. Nazara Technologies’ is down by 1.52%, trading at Rs 1,393.10. The broader Nifty 50 index is up by 1.28% at this time.

GST 2.0 expected to bring a  simpler structure

The government is working on an overhaul of the existing multi-slab GST system and will transition to a two-rate structure of 5% and 18%. However, a new 40% tax slab may be created for goods classified as sin products.

Existing Tax and Duties on Cigarettes

Cigarettes are the most highly taxed product in India. The current total apparent tax burden on cigarettes is between 48% and 55% of the maximum retail price (MRP). The total tax burden breakdown is:

• GST and cess: With GST at 28% and cess ranging from 5% to 36%, these together account for 15%–26% of the MRP.
• Fixed cess per stick: At ₹2.1–₹4.2 per stick, this levy represents around 25%–30% of the MRP.
• Other central duties: Levies such as Basic Excise Duty and NCCD contribute an additional 5%–7% of the MRP.

Online Gaming

The online gaming industry also expects a major shift in revenue due to the proposed 40% GST. Some companies might witness a potential closure and layoffs. The higher tax rates on specific goods may lead to substantial revenue for the government in the upcoming years.

There are industry inputs that say cigarettes may have a flat 40% GST slab. While this rate looks lower than the current effective burden, many experts believe the impact to be neutral or slightly higher, given the classification of these products as ‘sin goods’ and the limited scope for manufacturers to offset costs.

Disclaimer : Disclaimer : This content is only for informational purpose. It does not make any recommendation to act or invest.

Source: NSE