The Indian Stock markets woke up to the news of the Group of Ministers (GoM) proposing changes to tax, more specifically, the GST regime in India. One of the proposed changes includes a 35 per cent special rate on tobacco and aerated products.
Centre Proposes Tax Hike
This has gathered a lot of reaction from many online. It also appears to have garnered some reaction from markets, as FMCG firms are trading low in the intraday trading session on Tuesday, December 3.
This is more so the case particularly in the case of Varun Beverages, one of the largest bottling companies, and arguably the most consequential player for Pepsico, the parent company of Pepsi.
This 35 per cent would mean a rise from the current 28 per cent GST (which is the highest slab in the GST regime, with 0, 12, 18 and 28). This said rate would be in addition to the 12 per cent GST compensation cess.
Varun Beverages Shares Drop
The company shares listed on the National Stock Exchange; the value of the shares opened on a disastrous note, with a Rs 600 per share, compared to its previous day’s close of Rs 632.25.
It however recovered from that position, only to continue trading in red. It even hit the low of Rs 598.80 per share.
At the time of writing, while vacillating between intermediate highs and low, the overall decline in the intraday day stood at 1.93 per cent or Rs 12.20.
This brought the overall gain made in the last five trading sessions to 1.74 per cent. The overall price of Varun Beverages shares stood at 620.05 per share.
In addition to tobacco and aerated beverages, the panel has reportedly proposed a hike in GST rate on cosmetics, watches, handbags and other consumer goods.
In addition, the proposal also carries 18 per cent GST on Ready Made Garments costing between Rs 1,500 – Rs 10,000.
It needs to be noted that this is only a proposal at this stage, and the government is yet to enact it.
