The GST Council simplified tax rates for household essentials, triggering a surge in FMCG stocks
The Nifty FMCG index was the second-highest gainer among sectoral indices on Thursday, rising over 1.2%. Household names, including Britannia, Dabur, ITC, Nestle, and Colgate-Palmolive, were trading above 1% after India cleared tax rate revisions for the sector.
The GST Council on Wednesday approved a tax restructuring that simplifies the rates to just two slabs: 5% and 18%. The revised rates will come into effect from September 22.
For the fast-moving consumer goods sector, this results in rate cuts across various segments, including hair oil, toothpaste, and soap.
GST Cut Across Key Consumer Items
As part of the GST rate rationalization, household essentials such as soap, toothpaste, toothbrushes, hair oil, shaving cream, and coffee will now be taxed at 5%, down from 12% or 18%.
Meanwhile, items such as milk, paneer, and Indian breads like roti and paratha will be exempt from GST, with the rate reduced from 5%. Butter, ghee, cheese, and dairy spreads will now be taxed at 5%, down from 12%.
The GST Council has imposed a 40% tax on all tobacco products, including pan masala, cigarettes, and bidis, along with aerated water, caffeinated drinks, and carbonated beverages.
Stocks Watch
Biscuit company Britannia was the top gainer on the Nifty FMCG index, rising 4.4% to ₹6,169. GST on biscuits has been reduced to 5%.
Emami, which manufactures skin and hair care products, climbed 4.08% higher, while dental care products manufacturer Colgate-Palmolive rose 3.6% to ₹2,467.5.
Nestle India (+2.5%), Dabur (+1.7%), Hindustan Unilever (+0.96%), ITC (+1.54%), and Marico (+0.34%) were the other gainers on the FMCG index.
Dairy stocks also gained, with Dodla Dairy trading 1.34% higher at ₹1,454 and Parag Milk Foods rising 1.42% to ₹ 248.50.
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