GST Revision: Multiple segments of ITC get a boost but a core uncertainty remains

While GST on most items of daily essentials were brought down to 5% from their respective existing rates, those for stationery items were brought down to Zero. ITC is present in both the FMCG and Paper segment through these stationary items.

The council has proposed compensation cess to be subsumed under GST at 40% for tobacco products. GST of 40% will be charged on the MRP in comparison to its transaction value.
Currently, tobacco attracts 28% GST plus specific and ad valorem cess. The total tax incidence on tobacco is currently between 53% to 55% of the MRP.It is yet to be known if the National Calamity Contingent Duty (NCCD) would continue or not. NCCD is a duty separate from the GST that is levied on tobacco products.  Analysts are of the view that tax neutrality will continue for cigarettes.

Additionally, the GST Council has brought FMCG staples under the 5% slab, which is a positive for volumes. Meanwhile, notebooks, exercise books, etc have been brought down from the 12% slab to nil.

ITC shares were trading 1.4% higher at ₹417.55 apiece around 10.55 am on Thursday. The stock has declined 13.7% this year, so far.

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