ITC on a high!

ITC is most certainly on a high! The stock had hit a new high on Friday at Rs.295.50 and today at Rs.299.90, just 10 paise shy of Rs.300.

The stock is obviously reacting to the GST rates as the company will actually benefit after the “Sin tax” too.

For cigarette companies, what they have been paying till now is Value Added tax (VAT) and that will now get replaced by GST. Under the new rates, it will be in the tax slab of 28% plus 5% cess. With this, its specific excise duty, which was based stick wise, will see an all-round fall of 4 to 6%.

Foreign brokerage house, Jefferies has put out a report on the same, saying that GST cess for chewing tobacco has been raised from the current tax of 18% + VAT of 45-65% to 160-240%. This is expeted to increase the price of chewing tobacco and this in turn, as per Jefferies, could divert many of these “chewers” to cigarettes.