 ITC, Godfrey Phillips Shares Tumble Amid Proposed 35% GST on Cigarettes

Equitymarketinsights.com

The Group of Ministers on GST has proposed raising the tax on cigarettes, tobacco, and aerated beverages from 28% to 35%.

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ITC shares fell 2.16% to ₹466.85, Godfrey Phillips dropped 2.7% to ₹5,605.3, and VST Industries declined 1.7% to ₹319.75.

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Higher taxes may lead to reduced cigarette volumes, consumer downtrading, and a rise in counterfeit tobacco products.

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Punitive taxation has driven consumers toward illicit and lightly taxed tobacco products," ITC noted in its FY24 report

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The Union Budget 2024-25 maintained stable taxes on tobacco, aiding ITC in focusing on volume growth with minimal price hikes.

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Before the GST proposal, ITC was expected to report mid-single-digit volume growth for FY25, according to analysts.

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The GST Council, chaired by the Finance Minister, will review the proposal on December 21, with potential volume impacts looming.

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The proposed 35% GST on tobacco could disrupt the market, impacting stocks, sales, and consumer behavior in the coming months.

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Equitymarketinsights.com

ITC, Godfrey Phillips Shares Tumble Amid Proposed 35% GST on Cigarettes

The Group of Ministers on GST has proposed raising the tax on cigarettes, tobacco, and aerated beverages from 28% to 35%.

Tax Proposal Impact

ITC shares fell 2.16% to ₹466.85, Godfrey Phillips dropped 2.7% to ₹5,605.3, and VST Industries declined 1.7% to ₹319.75.

Market Reaction

Higher taxes may lead to reduced cigarette volumes, consumer downtrading, and a rise in counterfeit tobacco products.

Impact on Cigarette Sales

Punitive taxation has driven consumers toward illicit and lightly taxed tobacco products," ITC noted in its FY24 report

ITC's Statement on Taxation

The Union Budget 2024-25 maintained stable taxes on tobacco, aiding ITC in focusing on volume growth with minimal price hikes.

Previous Tax Stability

Before the GST proposal, ITC was expected to report mid-single-digit volume growth for FY25, according to analysts.

Brokerage Expectations

The GST Council, chaired by the Finance Minister, will review the proposal on December 21, with potential volume impacts looming.

Next Steps

The proposed 35% GST on tobacco could disrupt the market, impacting stocks, sales, and consumer behavior in the coming months.

Conclusion

Learn More