Varun Beverages, ITC Share Price In Focus Amid News of Proposed GST Rate Tweaks

Investors are paying close attention to stocks of aerated drinks and cigarettes due to news in the market that the GST council might propose raising the tax rates on these products. This, along with other tax rate adjustments, will be reviewed during the GST Council meeting on December 21, 2024.

Details of the Proposed Changes In GST Rate Slab 

Word in the market is that the proposal includes:

• A 35% GST rate on tobacco products and aerated beverages.
• Existing four-tier tax slabs of 5%, 12%, 18%, and 28% to remain unchanged.
• Adjustments for other items such as reducing GST on bicycles below ₹10,000 and exercise notebooks to 5% while increasing tax on luxury watches (above ₹25,000) and shoes (above ₹15,000) to 28%.

Additional Agenda 

Apart from the proposed new GST slab, the GST Council will also address other matters. These include potential reductions in GST on health and life insurance premiums, progress in establishing the GST Appellate Tribunal, and rationalisation of GST rates for various products. These discussions are intended to strike a balance between boosting revenue and handling industry-specific issues while improving the efficiency of the tax system.

Impact on Share Price Performance

• ITC Ltd shares declined by 2.7% to ₹464.10.
• Godfrey Phillips India fell 3.1% to ₹5,575.50.
• VST Industries dropped 2.3% to ₹318.30.
• Varun Beverages Ltd also dropped over 2.5% to ₹608.

The final decision on the proposed changes will be made during the GST Council meeting on December 21, 2024. While the government seeks a positive net revenue impact, the increase in taxes could present major challenges for affected industries. Investors and stakeholders will closely monitor developments as the decision could reshape market dynamics for tobacco and related sectors.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.