GST rate cut gives consumer stocks a big boost

Shares of consumer durable manufacturers traded higher in the morning session today after the Goods and Services Tax (GST) Council on Saturday announced a major downward revision in GST rates on a host of items.

GST rates on several consumer goods, including refrigerators, lithium batteries, vacuum cleaners, grinders, mixers, food processors, water heaters, hair dryers, water coolers, ice cream freezers, scents and perfumes, powder puffs, cosmetics, and electric ironing machines have been cut to 18 per cent from 28 per cent earlier.

White goods were the major beneficiaries in the stock market as share of Blue Star, Voltas, Bajaj Electricals, Symphony, Whirlpool, Havells, Kensai Neroloc, Asian Paints and Berger Paints gained 5-8 per cent in the morning trade.

The Council has fully exempt sanitary napkins from GST, completely removing the 12 per cent GST. Fortified milk has also been fully exempted from GST.

The Council also exempted several handicraft items such as stone, marble and wooden deities, rakhis without precious stones, brooms and commemorative coins from GST, union finance minister Piyush Goyal said.

Handloom products such as knitted caps priced below Rs1,000 will now attract a lower GST rate of 5 per cent. All leather items will now attract a GST rate of 18 per cent, while footwear priced below Rs1,000 will be taxed at 5 per cent.

Taxes on handbags, jewellery boxes, wooden photo frames, stone art wear, ornamental frame mirrors, glass art ware, aluminum art ware and handmade carpets have been cut to 5 per cent from 12 per cent earlier.

The GST rate on bamboo flooring, hand-operated rubber rollers and zip fasteners have been cut to 12 per cent from 18 per cent, while the GST rate on ethanol has been cut to 5 per cent from 18 per cent, a move aimed at encouraging higher ethanol blending in petrol and diesel.

All decisions will be effective from 27 July Goyal said.