ITC Hikes Gold Flake, Classic Brand Prices — Here’s What Smokers Will Pay

ITC Ltd. sharply raised cigarette prices Tuesday to offset a massive hike in government excise duties. The price of premium brands like Gold Flake and Classic surged by 41% as the company moved to protect its operating income.

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The move follows the implementation of a new tax regime on February 1. Analysts at B&K Securities and InCred confirmed the price revisions after conducting on-ground channel checks. While the government raised GST to the 40% “sin goods” slab, manufacturers are now passing the full cost to consumers.

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The 41% Price Surge

A pack of 10 Gold Flake cigarettes now costs ₹240, up from ₹170 previously. Therefore, smokers are paying roughly ₹24 per stick for the popular brand. Premium Classic Regular packs of 20 saw a similar jump to ₹480 from ₹340.

Meanwhile, value segments like Gold Flake Superstar increased by nearly 19%. A pack of 10 now retails at ₹70, compared to ₹59 before the hike. In fact, distributors reported that invoice sizes are being capped at ₹60 lakh per day to manage old inventory transitions.

New Excise Duty Structure

The new tax framework replaces the previous 28% GST and compensation cess model. Effective February 1, the government introduced a specific excise duty ranging from ₹2.05 to ₹8.50 per stick. This duty is calculated strictly based on cigarette length.

Next, filter cigarettes between 70mm and 75mm now face an additional levy of ₹5.4 per stick. The highest duty of ₹8.50 per stick applies to non-standard or “unusual” designs. Thus, the total tax incidence on premium sticks has effectively increased by nearly 50% for major manufacturers.

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Impact on Market Volumes

Market leaders like Godfrey Phillips India also raised prices for Marlboro Compact to ₹11.5 per stick. This represents a 21% jump from the previous ₹9.5 rate. Analysts suggest these hikes will test the price sensitivity of the Indian smoker.

Still, the move helped ITC shares rally 3.8% to ₹328.05 during Tuesday’s trading session. Investors welcomed the aggressive cost-pass strategy, which targets maintaining EBITDA margins. Yet researchers warn that such steep increases often drive consumers toward the illicit cigarette market.

Reality Check

ITC claims the price hikes are necessary to “negate the impact of excise duty.” Still, the 41% increase on premium brands far exceeds the per-stick tax jump of ₹5.4. Therefore, the company is using the tax event to expand its net realizations on top-tier brands.

In fact, internal data suggests that premium smokers are less likely to quit despite the “sticker shock.” Still, the company is already planning to launch more 74mm products with even higher price points. Thus, the legal industry risks losing its most price-conscious users to unbranded alternatives.

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The Loopholes

The new “length-based” tax system contains several engineering loopholes for manufacturers. In fact, ITC is shifting production toward 74mm sticks to avoid the ₹8.50 “non-standard” duty slab. Therefore, smokers may notice slightly shorter sticks that cost significantly more.

Still, the GST is now calculated on the Retail Sale Price (RSP) printed on the pack. This prevents retailers from under-reporting transaction values to save on taxes. Yet the “health cess” on pan masala remains lower than cigarette duties, incentivizing a shift toward chewing tobacco.

What This Means for You

If you are a regular smoker, expect your monthly tobacco bill to rise by at least 25-40%. First, check the manufacturing date on your pack; distributors are still clearing old stock at lower prices. Then, be prepared for a stick-by-stick price of ₹24 for premium variants at most kiosks.

Finally, watch for “dual-pricing” as older inventory disappears from the shelves by late February. Many retailers are already charging the new ₹24 rate even for older ₹17 stock. Before buying, verify the MRP to ensure you are not being overcharged for tax-paid inventory from January.

What’s Next

ITC will release its final volume data for the March quarter by late May 2026. Then, the GST Council will review the impact of the 40% slab on government revenue. Finally, the National Calamity Contingent Duty (NCCD) is scheduled for a statutory increase to 60% on May 1.

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