ITC, Godfrey Philips, VST Industries shares decline as cigarette makers unlikely to get benefit of GST rationalisation

Shares of cigarette makers like ITC, Godfrey Philips and VST Industries came under selling pressure in an otherwise strong markets after reports suggested that these companies are unlikely to get benefit of rationalisation of Goods and Services Tax (GST) rates which was announced by Prime Minister Narendra Modi on Independence Day from the ramparts of the Red Fort.

Shares of the country's largest cigarette maker ITC fell as much as 0.65%, Marlboro cigarette maker Godfrey Philips declined as much as 5.24% to hit an intraday low of ₹9,648 and shares of VST Industries declined as much as 1%.

Currently tobacco products like cigarettes and guthka attract 40% GST and analysts said that the rationalisation is unlikely to benefit this sector.

Prime Minister Narendra Modi on Sunday said the Centre has circulated the draft of the next-generation GST reforms among states and sought their cooperation to implement the proposal before Diwali.

PM Modi had announced the proposal to reform the GST law in his Independence Day speech.

The centre has sent its proposal, which removes 12 and 28% slabs, to the panel of state finance ministers on GST rate rationalisation. They will now discuss it and place it before the GST Council. The council is expected to meet next month.

While nil or zero% GST is charged on essential food items, 5% is charged on daily use items, 12% on standard goods, 18% on electronics and services and 28% on luxury and sin goods, the revamped GST regime will have two slabs plus a special rate of 40% for luxury and sin goods, sources said.

Meanwhile, auto stocks were witnessing strong buying interest after the proposed GST rationalisation calls for removal of 28% tax slab at which cars are taxed at.