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Brokerages To Witness Neutral To Positive Impact Of GST On FMCG Companies

The Goods and Services tax or GST Council finalised the rate structure for most goods and services along with the GST compensation cess for various products.

In the GST rate schedule nearly 81 percent of items are in the 18 percent tax bracket or below and the remaining 19 percent at the highest 28 percent tax slab.

According to brokerage houses, broadly, the tax rate is neutral to positive for most FMCG sectors.

The tax proposals, to some extent, were consensus and, therefore, there is no major positive surprise for the Street.

The GST will be positive for Colgate Palmolive and Dabur India and will be neutral to negative for cigarette manufacturers and other FMCG companies for an additional 5 percent cess on cigarettes and increase in incidence of indirect tax from 18-24 percent to 28 percent for other personal products– ITC , Hindustan Unilever , Godrej Consumer, Marico, Emami, Gillette.

A research report from JPMorgan states that GST will have a positive impact on soaps, toothpaste, hair oil, adhesives, coal, large cars, SUVs while cigarettes, cement, white goods, formulations, small cars, two-wheelers, and tractors the impact will be neutral.

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