Pan masala, tobacco, cigarettes, luxury cars, and online gaming could face a 40% tax, as per reports
Indian tobacco and gaming stocks fell on Monday, following reports that the government’s GST 2.0 framework may introduce a steep 40% “sin tax” on these sectors.
The Indian government is likely to introduce a sin rate of 40% for five to seven select items. Products likely to fall under this highest slab include pan masala, tobacco, cigarettes, luxury cars, and online gaming.
For cigarettes, already among the most heavily taxed items, the effective burden could rise to 48% – 55% of retail prices. Online gaming, currently taxed at 28%, could also move into the 40% bracket.
Tobacco Stocks Trade Lower
Shares of ITC, Godfrey Phillips India, Golden Tobacco and VST Industries were all trading lower on Monday.
Godfrey Philips was the biggest drag, falling nearly 6% to ₹9,590. Retail sentiment on Stocktwits was ‘bearish’. It was ‘bullish’ a week earlier. The stock has seen massive buying year-to-date, having gained over 85%. It is the only tobacco company to have gained this year.
At the time of writing, ITC shares were down 0.8% at ₹408.15. Retail sentiment on Stocktwits was ‘bearish’, shifting from ‘neutral’ a week earlier. The stock has fallen over 10% this year.
VST Industries was trading 0.7% lower at ₹270.75. YTD, the stock has lost nearly 20%. However, retail sentiment for VST was ‘bullish’ on Stocktwits. It was ‘bearish’ a week ago.
Gujarat-based Golden Tobacco was down 3% at ₹35.5, having shed 9% YTD. Retail sentiment shifted to ‘neutral’ from ‘bearish’ a day earlier.
Gaming Stocks
Despite a 37% YTD gain, mobile entertainment company Nazara Technologies fell nearly 2.4% to ₹1,383.2 on Monday.
Retail sentiment on Stocktwits was ‘bearish’, having been ‘bullish a week earlier.
Why Online Gaming Just Got More Expensive?
According to reports, the Department of Revenue argues that India’s “social ethos” justifies higher taxes on such goods, especially with gaming platforms reporting monthly spends exceeding ₹10,000 crore through UPI, translating to over ₹1.2 trillion annually.
The Centre also reportedly plans to bring real-money gaming under anti-money laundering laws, enforcing stricter KYC checks and reporting requirements. While aimed at protecting consumers, the move is expected to spark pushback from the industry.
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