With GST rates simplified into just two slabs, analysts expect stronger margins and higher demand in the consumer and automotive sectors, while healthcare and education emerge as significant beneficiaries
The GST Council has approved an indirect tax restructuring, effective September 22, which simplifies the rates to just two slabs: 5% and 18%. A 40% tax will remain applicable on demerit goods such as pan masala, cigarettes, and sugary or carbonated drinks.
Below is the GST breakdown by sector, along with the stocks to watch.
FMCG
Tax on hair oil, shampoo, toothpaste, toilet soap, bar, toothbrushes, and shaving cream reduced from 18% to 5%
Stocks to watch: Hindustan Unilever, ITC, Marico, Dabur, Patanjali Foods, Emami, Procter & Gamble Hygiene & Health Care, Colgate Palmolive
The tax on butter, ghee, cheese, and dairy spreads is reduced from 12% to 5%.
Stocks to watch: Nestlé India, Dodla Dairy, Heritage Foods, Parag Milk Foods
Tax on sewing machines and parts slashed from 12% to 5%. Stock watch: Singer India.
Tax on feeding bottles, napkins for babies, and clinical diapers reduced from 12% to 5%.
Agriculture
Tax on tractor tyres and parts reduced from 18% to 5% and tax on tractors cut from 12% to 5%.
Stocks to Watch: M&M, Apollo Tyres, MRF, JK Tyres, Escorts Kubota, CEAT, Goodyear, Birla Tyres
Tax on bio-pesticides and micro-nutrients, as well as drip irrigation systems, sprinklers, and agricultural, horticultural, and forestry machines, was lowered from 12% to 5%.
Stocks to watch: Kaveri Seed, Coromandel International, UPL, PI Industries, Bayer CropScience, Jubilant Agri and Consumer Products, Jain Irrigation Systems, Dhanuka Agritech, Godrej Agrovet, Nath Bio-Genes (I), Regaal Resources, Chambal Fertilizers.
Healthcare
Individual health and life insurance made tax-free, down from 18% to nil.
Stocks to watch: Go Digit General Insurance, Life Insurance Corporation, HDFC Life Insurance, ICICI Prudential Life Insurance, SBI Life Insurance, New India Assurance, ICICI Lombard, Star Health and Allied Insurance, Max Healthcare, General Insurance Corporation of India, Bajaj Finserv, and GIC Housing Finance.
Tax on thermometers, medical-grade oxygen, Diagnostic kits, and reagents has been reduced from 12% to 5%.
Cars and Bikes
The tax on petrol, petrol-hybrid, LPG, diesel, diesel-hybrid cars (not exceeding 1500 cc & 4000 mm), CNG cars (not exceeding 1200 cc & 4000 mm), and motorcycles (350 cc & below) has been slashed from 28% to 18%.
Tax on three-wheelers reduced from 28% to 12%.
Stocks to watch: Tata Motors, Maruti Suzuki, Hyundai, M&M, Bajaj Auto, Eicher, Hero MotoCorp
Education
Maps, charts, globes, pencils, sharpeners, crayons, pastels, exercise books, notebooks, and erasers are made tax-free.
Stocks to watch: Camlin Kokuyo, Navneet Education, Repro India, ITC, Sundaram Multi Pap
Electronic Appliances
Tax on air conditioners, televisions (above 32”), including LED and LCD TVs, monitors, projectors, and dishwashing machines, was reduced from 28% to 18%.
Stocks to watch: Bosch, Blue Star, Voltas, Dixon
Sin and Luxury Goods
The GST Council has introduced a steep 40% slab for sin and luxury goods. Items such as cigarettes, premium liquor, high-end cars, and sweetened beverages will now be taxed at this higher rate.
Stocks to watch: ITC, Varun Beverages, United Spirits, Som Distilleries, Godfrey Phillips, Radico Khaitan, Tilaknagar Industries.
Armoured Luxury Sedans
Imported armoured luxury sedans will be exempt from GST only in rare cases. For instance, vehicles brought in by the President’s Secretariat will qualify under this rule.
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