Shares of ITC, Godfrey Phillips, Varun Beverages, and VST Industries in Focus as GST Panel Proposes 35% Tax on Cigarettes, Tobacco, and Aerated Drinks – Major Impact Expected {update}

• Cigarettes
• Tobacco products
• Aerated beverages

These recommendations aim to offset revenue losses from rate cuts on essential goods.

Stock Market Reaction

Following the news:

• ITC: Shares fell 2.16% to ₹466.85.
• Godfrey Phillips: Shares dropped 2.7% to ₹5,605.3.
• VST Industries: Declined 1.7% to ₹319.75 apiece.

Broader Impact

This potential tax increase could affect:

1. Revenue: Higher costs might impact demand.
2. Diversified Portfolios: ITC’s non-tobacco businesses may cushion the blow.

Key Details on GST Rationalization

• Current structure retains four slabs: 5%, 12%, 18%, 28%.
• New 35% slab proposed for demerit goods.
• Over 148 items under review, including apparel, luxury goods, and beverages.

Next Steps

The GST Council, led by Union Finance Minister Nirmala Sitharaman, will decide on these proposals in its meeting scheduled for December 21, 2024, in Jaisalmer.