Tobacco stocks: The GST Council can increase tax on cigarette and other tobacco products, due to which ITC, VST Industries, Godfrey Phillips fell from the shares. According to media reports, GST rates will be increased after the compensation cess is removed on these things. On this report, ITC shares fell two and a half per cent in Intra-Day, Godfrey Philips shares more than 6 per cent and VST industry shares lost more than 4 per cent. Currently, ITC is down 1.06% on NSE to ₹ 402.10, VST industry slipped 3.67% to ₹ 288.45 and Godfrey Philips at ₹ 6,223.10 with a weakness of 5.12%.
Cigarette sales are expected to decline sharply due to increase in tax
Their sales may decline sharply as tax on cigarettes increases. Customers can go towards other options with low prices. In the budget this year, Union Finance Minister Nirmala Sitharaman did not announce any change in tax on tobacco. Cigarette business supports the stable tax system. The last time tax on tobacco was increased by 2 percent in February 2023.
How much tax is there now and what is the proposal?
Cigarettes and other tobacco products are currently under 28 per cent GST slab, but due to compensation cess -like levy, the total indirect tax reaches 53 per cent. Now in the proposal, it is proposed to impose GST rate 40 percent and extra excise duty on it. Since the compensation cess will run only till 31 March 2026, then there is a proposal to maintain revenue from tax. According to officials, bringing new cess again is not considered a good option. Currently, excise duty on cigarettes up to 65 mm is Rs 5 per 100 sticks, which is also on cigarettes with a filter of 70-75 mm. Apart from this, the National Disaster Casual Fee (NCCD) size, implemented from the year 2023, range from Rs 230 to Rs 850 per 1,000 sticks based on factors like filter type and flavor.
Tobacco products are called ‘Sin Goods’. They are currently taxed at 53 percent but still it is quite less than the World Health Organization (WHO) recommendation of 75 percent. The government received a revenue of ₹ 72,788 crore in FY 2023 from tobacco products including cigarette and pan masala.
HP Telecom IPO: HP Telecom’s IPO, who sells branded goods, is getting these signs from gray market