The Goods and Services Tax (GST) Council on Thursday fixed tax rates on 1,211 items, most of which will likely become cheaper while for some it might be negative news where the effective GST rate is higher than the effective tax rate.
The GST trend do not show any major deviation from the current effective tax rates for most products except in the case of a few consumer products. Companies catering to products in automobiles, cement, beverages, food items, personal care items as well as building material.
Most primary food articles like cereals, meat, fish, and vegetables have been kept in 0-5 percent tax bracket as expected. It would be best to assume that most rate changes will be passed on to consumers. The council will decide on the balance rates and the GST rate for services on May 20.
FMCG companies stand out as key beneficiaries and stocks like Colgate, HUL as well as Pidilite Industries stand out as key beneficiaries, Kotak Ínstitutional Equities said in a note.
Most personal care products will be taxed at 28 percent except hair oil, soaps and toothpaste, whose tax rate is 18 percent. Among food and beverage items, aerated water, chocolates, chewing gum, malted food drinks will be taxed at 28 percent, cakes, cornflakes, jams at 18 percent while the rest will be between 5%-12%.
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