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Tobacco stocks gain; ITC rises nearly 4%

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Press Trust of India New Delhi
Tobacco stocks today rose by up to 3.6 per cent after a high-powered council's decision on rate structure eased the pre-GST tax rate concerns looming on the sector.

Shares of ITC rose by 3.64 per cent and was the biggest gainer among the 30-Sensex stocks.

Golden Tobacco surged 4.89 per cent and VST Industries rose by 2.43 per cent on BSE.

"A tax over and above 28 per cent will be imposed on luxury, sin and demerit goods. These include aerated drinks, tobacco, pan masala and luxury cars, among others. The cess to be imposed on each of these items will be such that the final post-GST tax incidence on them remains the same as before the GST. Currently, tobacco is taxed 65 per cent, while the other items are taxed 40 per cent," Nomura said in a report.
 

Meanwhile, Credit Suisse has reportedly said that the decision to levy 28 per cent tax (alongwith cess) on tobacco products will remove the overhang of a disruptive change in taxation on cigarettes.

Shares of consumer durable companies also gained on hopes that lower tax rates would be applied after a four-tier GST tax structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent decided by a high-powered council yesterday.

Colgate went up by 3.40 per cent, Dabur India gained 1.80 per cent and Hindustan Unilever Ltd rose by 0.91 per cent.

"The country's ambitious tax reforms in rolling out GST received a big boost yesterday with the GST Council finalizing the rate slabs," YES Securities said in a report.

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First Published: Nov 04 2016 | 7:24 PM IST

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