The government has constituted a committee regarding the future taxation policy regarding tobacco products. After the announcement of the formation of the committee, ITC shares fell by about 6% on Tuesday. Shares of ITC, which manufactures cigarettes to FMCG products, closed 6.27% lower at Rs 248.85 on the NSE on Tuesday. Whereas a day earlier on Monday, the stock was trading at its 52-week high of Rs 265.
ITC has re-entered the list of bluechip companies of NSE only last month. It was removed from the list of bluechip companies in June 2021. The shares of ITC continued to trade in a limited range till September 21. While the Nifty index gained 20% during January to August 2021, ITC traded between Rs 211 and Rs 213. However, in September, ITC jumped 12%.
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cigarette and tobacco stock
The decision to set up the tax committee had almost the same impact on all cigarette and tobacco companies. Shares of Golden Tobacco definitely jumped 5% to Rs 162 during the day’s trading on Tuesday. However, by the end of trading, it also recorded a decline of 2 percent and it closed at Rs 152 on NSE.
However, on the other hand, the shares of VST Industries closed at Rs 3,692.05, down 2.95%. Shares of Godfrey Phillips India showed a mixed effect during trading. During the intraday, it saw a rise of 1%. However, at the close of trading, it closed down 1.42% at Rs 1,296.10.
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taxation policy
The Union Ministry of Health and Family Welfare has constituted an expert committee to review the taxation policy of tobacco products. This committee will formulate a comprehensive tax policy on tobacco products from the perspective of public health.
The committee will review the existing tax structure applicable to all types of tobacco products and work out a blueprint for the tax policy. It will also advise on the steps that India should take to comply with the MPOWER rules.
The tax that the country receives from the sale of tobacco products has almost doubled in the last 10 years. The tax revenue on tobacco products was Rs 152 billion in 2011, which has increased to Rs 356 billion in 2021.
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