GST Council meeting: The 50th GST Council concluded in New Delhi on Tuesday 11th July 2023. Before the half-century, the Council held 49 meetings and its decisions have always had a significant impact on the GST implementation in India and the stock market about the changes affecting the sectors.
So let us understand the changes in GST and the possibility of impacts on stocks within those sectors
Part I: GST Council approves rate reduction on the following items
- Uncooked, unfried & extruded snack palettes brought down from 18 to 5 %. (could benefit food: snacks sectors and stock like tasty bites, ITC, Nestle (NS:NEST), Daawat, Doodla, Hindustan Foods, etc)
- Fish soluble paste brought down from 18 to 5% (could benefit seafood: restaurants and catering sector and stock like Devyani international, Avanti Feeds, ITC, etc)
- LD slag is to be at par with blast furnace slag. It has been changed from 18 to 5%. (benefits road construction plus other civil-related works and cement sectors and stocks like Ashoka Buildcon, Dilip Buildcon (NS:DIBL), IRB infrastructure, Elgi Equipment, L&T, Ncc, NBCC (NS:NBCC), PNC Infratech (NS:PNCI), etc)
- Imitation zari thread brought down from 12% to 5%. (could benefit polyester and e-commerce sectors and stocks like nitin spinners, FSN E-Commerce Ventures (NS:FSNE) (Nykaa), Vedant Fashions Ltd (Manyavar), Westlife Foodworld Ltd, etc)
- Food served in cinema halls down from 18% to 5%. (could benefit cinema sectors and stocks like PVR (NS:PVRL), Inox leisure )
- Exempted GST on key imports of pharma products like cancer drug Dinutuximab, and Food for Special Medical Purposes (FSMP). (could benefit pharma sectors and stocks like venues remedies, Sun Pharma (NS:SUN), sparc, Albertdavid, Sakar, etc)
Part II: GST Council approves rate increase on the following items
- All multi-utility vehicles (MUVs), whether it's sports utility vehicles (SUVs) or crossover utility vehicles (XUVs), will have to pay a tax of 22 percent compensation cess over and above the 28 percent GST rate (could affect auto sectors and sticks like Maruti (NS:MRTI), ForceMotors, Tata motors, etc)
- GST on online gaming and bets
- Council decided to do away with the distinction of a game of skill and chance in the case of online gaming
- 28% GST rate will be imposed on online gaming, casinos, and horse racing.
- The tax rate will be levied on the full face value of bets at the entry point. (Online gaming stocks like Nazara Technologies (NS:NAZA), Zensar Technologies (NS:ZENT), Delta Corp (NS:DELT), OnMobile Global (NS:ONMO), Tech Mahindra (NS:TEML) and giant Tata Consultancy Services (NS:TCS), and Infosys (NS:INFY) among others).
Changes will come into effect after amendment in the GST law. Stay tuned for more updates on GST impact on stocks post Q1 results are declared.
Disclaimer: The above article is for self-educational purposes. The analysis was conducted by the following students: G10 and Yogeeta for learning purposes.
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