FMCGs are high dividend-paying companies, and investors in the sector would benefit largely since dividends are now tax-free. The reduced surcharge will also result in significant savings, since most companies in the sector have a high effective tax rate. While most companies would benefit from the reduction in peak customs duty, main beneficiaries would be Asian Paints and Gillette India. Implementation of VAT is estimated to be negative for the sector.
Wish List
Reduction in customs duty on industrial oils and key inputs such as linear alkyl benzene
Increase in abatement rate on soaps and detergents
Cigarettes should be kept out of VAT
What they got
Excise duty cut on biscuits, sugar confectionery, alcohol-based toilet preparations
Excise duty of 8 per cent imposed on branded edible oils
VAT of 4 per cent imposed on cigarettes
Hindustan Lever
Edible oils and vanaspati, which will be loaded with an 8 per cent excise, account for just 4 to 5 per cent of sales.
The excise cut on deodorants and aftershaves is not expected to have a big impact as it does not apply for the company
