GST rate cut: Stocks that are likely to benefit the most from Finance Minister Arun Jaitley's move
The GST rate cut announced by Finance Minister Arun Jaitley on Friday is likely to benefit FMCG stocks and lead a revival for the sagging market.
The move has come as a relief for many consumers and companies hit hard by the allocation of specific goods to the 28 per cent tax bracket.
As many as 178 items of daily use were shifted from the highest tax bracket of 28 per cent to 18 per cent. In the services segment, the tax rate was reduced to 5 per cent for all restaurants, both air- conditioned and non-AC while food bills in restaurants of starred hotels will be taxed at a higher rate, Finance Minister Arun Jaitley said after the GST Council meeting in Guwahati.
The new tax slabs will come into effect from November 15. The all-powerful GST Council reduced the number of items in the top 28 per cent Goods and Services Tax (GST) slab to just 50 from 228 that were put on the list until now.
Only luxury and sin goods such as cigarettes and sugary drinks remain in the highest tax bracket and items of daily use of the middle-class have been shifted to the 18 per cent slab.
Chewing gum, chocolates, coffee, custard powder, marble and granite, dental hygiene products, polishes and creams, sanitary ware, leather clothing, artificial fur, wigs, cookers, stoves, after-shave, deodorant, detergent and washing power, razors and blades, cutlery, storage water heater, batteries, goggles, wrist watches and mattress are among the products on which tax rate was cut from 28 per cent to 18 per cent. Brokerage Motilal Oswal has listed the following stocks which are likely to benefit from a GST rate cut.
Beneficiaries of rate reduction from 28% to 18%
Shampoo, deodorants & other toiletries - HUL, ITC Detergents - HUL, Jyothy Labs Hair cream & dyes - Godrej Consumers Liquid or cream for skin washing - Colgate Instant coffee - Nestle, HUL Chocolates, chewing gums, malt extract, food preparation of flour - GSK Consumer, ITC, HUL Shaving & razor blades - Gillette, HUL Watches, goggles - Titan Luggage - VIP Industries, Safari
Fork lifts, lifting and handling equipment, bulldozers, excavators, earth moving machinery, escalators - Larsen & Tubro, BEML
Marble and granite tiles & ceramic items - Kajaria Ceramics, Somany Ceramics, Asian Granito Wooden furniture - including plywood, veneered panels and laminated wood - Century Ply, Greenply Mattress, bedding articles and similar furnishing items - Bombay Dyeing Sanitary wares - Cera Sanitaryware Limited
Rubber tubes and articles of rubber - MRF, Ceat, Apollo Tyres, JK Tyres
Beneficiaries of reduction of tax rates in other slabs
Fans, pumps & lamps - Crompton Consumer, Havells, Orient Electric, Bajaj Electricals Switches - Havells Cables & wires - Havells, Finolex Cables, V Guard Primary cell & batteries - Eveready Industries
18% slab to 12% slab
Condensed milk - Nestle, Parag Milk Foods Refined sugar and sugar cubes - EID Parry, Balrampur Chini, Shree Renuka Pasta & diabetic food - Nestle, ITC Other - 18% slab to 12% Slab Spectacles frames - Titan
28% slab to 5% slab
Aircraft engines, aircraft tyres & seats - InterGlobe Aviation, Jet Airways, SpiceJet