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Friday, May 19, 2017
From Hair Oil to Cement, India Revamps Taxes: Winners and Losers
The wait is over: India has cleared the way for the biggest tax reform since independence in 1947.
The main beneficiaries of the new goods and services tax, due to be rolled out on July 1, include steelmakers and some consumer goods, though personal care items including sanitary ware will be taxed at the top rate, along with appliances such as air conditioners.
Here’s a look at the winners and losers:
Fast-Moving Consumer Goods
The sector is a clear winner. Consumer staples including milk, fruits and vegetables, grain and cereals have been exempted. Sugar, tea, coffee and edible oil will be taxed the lowest rate of 5 percent. Companies that may gain include Hindustan Unilever, Nestle India and Dabur India.
Smokers be warned: cigarettes will attract a tax of 5 percent on top of the peak GST rate of 28 percent. ITC, Godfrey Phillips and VST may pass on the higher costs.
Here the impact is likely to be marginal. Vehicles already attract different levies, which add up to 28 percent -- the peak GST rate fixed for the sector. Gains derived from a unified tax system may still be passed on to consumers, analysts say. Maruti Suzuki India, Tata Motors and Mahindra and Mahindra could benefit.
Appliances such as air-conditioners, refrigerators and washing machines will attract the peak rate, which is slightly higher than the existing tax slab. Companies may increase prices to preserve margins, Nirmal Bang Equities said in a note. Whirlpool of India, Voltas and Havells India could be impacted.