ITC, Godfrey Philips: Tobacco stocks rally after 56th GST Council meeting; check the announcements

The stocks drew buying interest following the announcements made by the Finance Minister after the deliberations at the 56th GST Council meeting.

Last seen, ITC shares were trading 1.60% higher at ₹418.35 apiece on the NSE, while Godfrey Phillips India was up 4% at ₹10,590.

VST Industries was trading 1.63% higher at ₹273.70.

The finance minister announced that the GST tax rates on common use items ranging from hair oil to corn flakes, TVs, and personal health and life insurance policies were slashed after the all-powerful GST Council on Wednesday approved a complete overhaul of the tangled Goods and Services Tax regime.

The GST Council approved an overhaul of rates by limiting slabs to 5% and 18%, effective from September 22, the first day of Navaratri.

Almost all personal use items will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.

Briefing reporters after a marathon daylong GST Council meeting, Union Finance Minister Nirmala Sitharaman said all decisions were taken unanimously, with no disagreement with any state.

The FM informed the media that the panel approved simplifying the goods and services tax (GST) from the current four slabs -- 5, 12, 18 and 28% -- to a two-rate structure -- 5 and 18%.

A special 40% slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes.

However, the FM stated that tobacco, gutkha, tobacco products and cigarettes will continue to be charged at the current 28% plus a compensation cess till such time that loans taken to pay states for revenue loss are fully paid back.

The move to simplify the tax regime -- first announced by Prime Minister Narendra Modi in his Independence Day speech -- comes as India's exports to the US face a 50% tariff -- the highest in the world.

The Indian economy is heavily reliant on consumption, with private consumption accounting for 61.4% of the nominal GDP last fiscal year.

The GST reforms are likely to boost the economy by up to 0.5 percentage points by the second year of their implementation, effectively neutralising the full impact of the US tariff, economists said.

Revenue Secretary Arvind Shrivastava told reporters that the financial implication of the rate rationalisation would be ₹48,000 crore, and this would be fiscally sustainable.