The 45th GST
Council Meeting headed by Union Finance Minister Nirmala Sitharaman concluded last week.
The meeting has crucial decisions being made, including the extension of concessional tax rates on COVID-19 medicines.
Tax cut on cancer drugs, and waiver of GST on import
of highly expensive medicines for muscular atrophy.
It decided that it will continue to keep petrol and diesel out of the uniform national tax regime.
The GST changes that have been proposing done to revisit the rates for certain industries such as metals, ores, and concentrates where the revision has been upward.
Experts are of the view that the GST revisions will benefit market leaders in respective sectors that are likely to benefit the most.
Statement of Naveen Chandramohan, Founder & Fund Manager – ITUS Capital
It is important to realize that while there would be a short-term negative impact on the market, the branded players will be able to absorb this into the price over time.
If one can take a slightly more nuanced stance towards the GST revisions.
It is increasingly clear that the market leaders will benefit to gain the share of the market vs the unorganized players.
Statement of Rahul Sharma, Co-Founder, Equity99
The company`s 1Cr COVID-19 doses will hit the market next month and now with the extension of the concessional rate we expect this counter to reach the price of 750 with SL of 500.
Recently the government announced OFS of Rs 700Cr in this counter at the floor price of 116 after which stock corrected 5% intra-day. Now, with the GST rate hike on copper, we expect this counter to reach the price of Rs 100.
With the introduction of GST on aggregators & the resignation of co-founder Gaurav Gupta, the stock looks dicey on the charts. We expect a Target price of 110 on this stock.
Statement of Ajit Mishra, VP- Research, Religare Broking Ltd.
The GST exemption for COVID-related drugs is positive for companies like Cipla and Dr. Reddy.
No raise in rate for Tobacco products came in as a huge positive for ITC.
Moreover, the announcement of GST to be paid by e-commerce operators is negative for food delivery players and negative for Zomato and Jubilant Foodworks
Sectors To Benefit –
From January 1, food delivery apps will have to collect and deposit 5 percent GST with the government, in place of restaurants, for deliveries made by them. There would be no extra tax burden on the end consumer.
Today, 95% of the Paints industry is controlling by the branded players and this is likely to be a phenomenon we see across multiple sectors.
Where growth will flow into, This will naturally see cash flow growth focussed companies see the benefit over time.
Statement of Vinod Nair, Head of Research, Geojit Financial Services
GST on ores and concentrates of metals such as iron, copper, aluminum, and zinc.
Has been increasing from 5% to 18%, which will have an impact on domestic metal stocks.
Do not expect any impact due to GST introduction of 5% on services by food delivery platforms.
As it is only a transfer of responsivity from the restaurants to improve efficiency in tax collection.
Expect some impact on the footwear sector due to the increase of GST rate to 12% from the current 5% to correct the inverted duty structure (for footwear costs less than Rs1,000
The GST council has decided to extend the existing concessional GST rates on Covid-19 drugs till Dec 31, 2021.
In addition to that, the GST rates of 7 more drugs have been slashes from 12% to 5% till the end of the calendar year.
Further, while importing for personal use, life-saving drugs namely Zolgensma (which is also mentions)
Moreover, the world’s most expensive drug and Viltepso have also been exempting from GST. the GST rate on Keytruda drugs has also been cut to 5%.