ITC slips 6% on excise duty hike

ITC Ltd shed over 6 per cent to Rs 232, after the Finance Minister announced structural changes in the excise duty on cigarettes, cigars and cigarillos. After a flat opening at Rs 248 levels, the stock touched high of Rs 252 before the Budget proposals, and is now trading down almost 8per cent from its intra-day high level backed by huge volumes. Around 2.4 million shares changed hands so far, as compared to average 210,000 shares that were traded in last two weeks. The Budget proposes a hike in excise duty (on filter cigarettes of length exceeding 60 mm) between 10 per cent and 18 per cent. At present, cigars, cheroots and cigarillos of tobacco attract ad valorem rate of basic excise duty (BED) of 8per cent plus health cess of 1.6per cent. These rates are now being replaced with a composite rate of 10per cent or Rs 1,227 per thousand, whichever is higher (BED) and 1.6per cent or Rs.246 per thousand whichever is higher (AED). Cigars, cheroots and cigarillos of tobacco substitutes will now attract BED of 10per cent or Rs 1,473 per 1000 whichever is higher. Basic excise duty on branded unmanufactured tobacco and tobacco refuse is being increased from 42per cent to 50per cent.