FMCG and tobacco conglomerate ITC’s stock was buzzing in trade on Wednesday after a report claimed that a government panel has suggested ways to raise tax on tobacco.
The shares of ITC went up nearly 2 percent during today’s session amid a NewsRise report quoting sources that a government panel is suggesting ways to raise tax on tobacco to 80 percent of the retail price in the coming years.
Earlier this month, the Union Ministry of Health and Family Welfare constituted an expert panel on future taxation policy for tobacco.
The panel will develop a roadmap for tobacco tax policy and suggest recommendations from Budget FY23 onwards. The move is likely to have a short-term impact on ITC, Godfrey, and VST Industries but in the long term, it may have a positive impact as there will be predictability in the policy.
The panel has been formed to make India compliant with the R component of the World Health Organization’s (WHO’s) MPOWER plan. R stands for "raise taxes on tobacco".
The expert committee comprises representatives from the Ministry of Health, Department of Revenue, GST Council, Customs, NITI Aayog, and WHO.
At present, tobacco products are taxed at 28 percent under the Goods and Services Tax (GST). In 2014, the Health Ministry had ordered that all tobacco products should have pictorial warnings that should cover 85 percent of the packaging.
ITC is also due to announce its financial result for the quarter ended September 30 later in the day. According to a Moneycontrol report, analysts expect the company’s profit after tax (PAT) to rise up to 12 percent year-on-year (YoY).
At 2:50 pm, the ITC stock was trading 0.84 percent higher at Rs 238.80 apiece on BSE and was up 0.91 percent at Rs 238.85 apiece on NSE.