ITC drops nearly 6% after panel suggests 40% GST rate on tobacco products

Mumbai: Shares of cigarette makers were trading lower on Monday after a panel under chief economic advisor Arvind Subramanian recommended 40% goods and services tax (GST) rate on tobacco products.

ITC Ltd shares fell as much as 5.7% to ₹ 316.55 apiece, Godfrey Phillips India Ltd dropped 5.7% to ₹ 1,477.75, VST Industries Ltd was down 4.2% to ₹ 1,620.05, while Golden Tobacco Ltd 2% to ₹ 43.75.

At 12:53pm, the BSE FMCG index was down 2.2% to 7,668.48, while the benchmark Sensex index fell 0.38% to 25,541.11.

The panel has recommended a three-tier rate structure wherein some essential goods will be taxed at a lower rate of 12%; so-called demerit goods such as luxury cars, aerated beverages, pan masala and tobacco products at a higher rate of 40%; and all remaining goods at a standard rate of 17-18%, according to a Mint report.