The Indian government is considering various options to replace the existing compensation cess on tobacco products, a move that could have significant implications for ITC and other tobacco companies. This potential change in the tax structure might be announced in the upcoming Budget, signaling a possible shift in the fiscal approach towards the tobacco industry.

Potential Tax Structure Changes

The government's exploration of alternatives to the current compensation cess on tobacco products could lead to a new tax regime for the industry. While specific details of the proposed changes are yet to be revealed, this development is likely to be closely watched by stakeholders in the tobacco sector.

Implications for ITC and the Tobacco Industry

ITC, as one of India's leading tobacco companies, could face substantial impacts from any changes to the tax structure. The potential shift from the compensation cess to a new system may affect:

• Pricing strategies
• Profit margins
• Overall business operations

Other tobacco companies operating in India are also likely to be affected by these potential changes.

Timeline and Expectations

The government is considering announcing these changes in a future Budget. However, the exact nature and extent of the changes remain uncertain at this stage.

Industry Response

As the government studies various options, tobacco companies like ITC may need to reassess their long-term strategies and financial projections. The industry's response to these potential changes will be crucial in determining the future landscape of the tobacco market in India.

While the full impact of these potential changes is yet to be determined, it's clear that the government's decision could reshape the regulatory and fiscal environment for tobacco products in India. Stakeholders in the industry will need to stay informed and prepare for potential adjustments in the coming years.

ITC Limited has issued and allotted 1,95,210 ordinary shares under its Employee Stock Option Schemes (ESOP) on December 19, 2025. The allotment was completed following the exercise of 19,521 options by eligible employees, with the committee meeting concluding at 3:10 p.m. on the same day.

Share Allotment Details

Updated Share Capital Structure

Following this allotment, ITC's issued and subscribed share capital has increased significantly. The company's total share capital now stands at ₹1,252.90 crores, divided into 1,252,89,59,771 ordinary shares of ₹1.00 each.

Regulatory Compliance

The share allotment was conducted in compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. ITC has formally communicated this development to both the National Stock Exchange of India Limited (NSE) and BSE Limited, ensuring transparency and adherence to regulatory requirements.

ESOP Implementation

The allotment represents the successful implementation of ITC's Employee Stock Option Schemes, which are designed to align employee interests with shareholder value creation. The exercise of options by employees demonstrates confidence in the company's long-term prospects and provides them with equity participation in the organization's growth.

The communication was signed by R.K. Singhi, Executive Vice President and Company Secretary, and sent to the listing departments of both major stock exchanges where ITC shares are traded.