Cigarette shares gain on GST Council proposals; ITC up over 5%
Shares of cigarette companies are in focus with ITC rallying over 5% in morning deals, after the Goods and Services Tax (GST) Council on Thursday cleared a proposal to cap the cess on tobacco and cigarettes.
ITC surged 7.5% to Rs 288 on BSE in intra-day trade. The stock was trading close to its lifetime high of Rs 292, touched on February 7, 2017.
Godfrey Phillips India (up 5% at Rs 1,346), VST Industries (4% at Rs 2,748) and Golden Tobacco (3% at Rs 82) are other stocks rallied over 2% on BSE in intra-day trade. On comparison, the S&P BSE Sensex was up 0.53% at 29,742 points at 09:52 am.
On tobacco and cigarettes, the cap would be 290% or Rs 4,170 per 1,000 cigarette sticks, a Business Standard report suggests quoting government officials.
Currently, the tax on cigarettes is a mix of ad valorem (on estimated value of goods being taxed) and a specific tax. While the value-added tax (VAT) is ad valorem, excise is a mix of ad valorem and specific tax. “We will most likely use a combination of both. For instance, 50% ad valorem and 50% specific, so there are no leakages," the official said. CLICK HERE TO READ THE FULL REPORT.