ITC has reportedly increased the maximum retail price of Gold Flake Premium cigarettes by Rs 10 per pack, taking a 10-cigarette pack to Rs 135 from Rs 125, a rise of about 8 per cent. The company has not officially confirmed the revision, which is based on reports. The move comes as higher taxation continues to reshape pricing and earnings in India's legal cigarette market.
What has changed
The new pricing applies to regular-size filter-tipped cigarettes of 60-70 mm, and packs at the revised MRP are expected to reach warehouses by the fourth week of November. Dealer checks cited by NDTV Profit indicate this is the brand's second increase in 2026. Taken together, the two revisions make a pack 17.4% costlier than at the start of the year, when it sold for Rs 115.
Why prices keep rising
The repeated revisions trace back to a change in how cigarettes are taxed. From February 1, an additional excise duty was imposed on cigarettes over and above the highest 40 per cent GST rate. It replaced the earlier structure of 28 per cent GST plus a compensation cess, which had been in place since GST began in July 2017.
How the new duty works
The duty is linked to cigarette length. Per PTI, short non-filter cigarettes of up to 65 mm attract about Rs 2.05 per stick, medium-length ones Rs 3.6 to Rs 4, and long or premium cigarettes about Rs 5.4. The top slab of Rs 8.50 per stick applies to non-standard designs that most mainstream brands avoid. The longer the cigarette, the sharper the increase for consumers.
Price snapshot: what February looked like
Distributors told PTI that packs of 10 were costlier by at least Rs 22-25 after the change. Manufacturers had not yet notified revised MRPs, so these were expected prices.
Product (as reported in February) | Earlier price | Expected price |
|---|---|---|
Wills Navy Cut (76 mm), 10 sticks | about Rs 95 | close to Rs 120 |
Gold Flake Lights, Wills Classic, Classic Milds (84 mm) | about Rs 170 | Rs 220-225 |
Illicit trade and ITC's pricing strategy
Manufacturers now face a second pressure besides tax. A widening price gap between legal cigarettes and cheaper illicit alternatives is a concern. ITC flagged the risk of consumers shifting to unregulated products in its September-quarter commentary, and says it follows a calibrated pricing strategy to manage the tax impact while limiting a disproportionate shift towards illicit trade.
Trade bodies raised the same worry earlier this year. The All India Consumer Products Distributors Federation warned that steep hikes could encourage smuggling and counterfeit products, hurting small kirana stores that depend heavily on tobacco sales.
Impact on ITC's earnings
The pressure shows in the latest results. Profit from ITC's cigarette business fell 27.2% year-on-year to Rs 3,813 crore in the September quarter, from Rs 5,241 crore a year earlier, and net revenue from the segment declined 21%.
At the company level, net profit dropped 20.1% to Rs 4,137.12 crore, while revenue rose 1.8% to Rs 18,401 crore. The FMCG business, which includes ITC's packaged foods portfolio, posted its strongest revenue growth in 14 quarters. The contrast shows how the company's growth is shifting towards its consumer goods and foods businesses.
The public health argument
The Centre's position is that higher tobacco taxes bring India closer to global public health standards. World Bank estimates cited by Business Today put the tax incidence on cigarettes in India at about 53 per cent of the retail price, below the 75 per cent level the World Health Organization recommends. The UK and Australia tax cigarettes at 80-85 per cent.