The GST Council recently approved a significant adjustment to the GST structure, implementing a two-slab system of 5% and 18%, with a specific 40% rate on luxury and sin goods. This decision eliminates the previous tiers of 12% and 28%. This change follows discussions on CNBC-TV18 and comes shortly after Prime Minister Narendra Modi’s Independence Day address on August 15. Starting September 22, several FMCG stocks are anticipated to benefit from these new GST rates. Colgate’s entire product range, including toothpaste, toothbrushes, and personal care items, will see GST drop from 18% to 5%, with toothpowder’s rate decreasing from 12% to 5%.
Britannia is expected to gain from this adjustment, as approximately 85% of its products, mainly biscuits and cakes, will have their GST reduced from 18% to 5%. Dairy items, representing around 5% of their sales, will also be affected. Nestlé India is set to benefit from the new GST regime, with around 67% of its consolidated revenue likely to experience a reduction in tax rates. Key products like coffee and chocolates, which represent almost one-third of sales, will see a decrease from 18% to 5%. Dabur’s toothpaste, hair oils, and shampoos, making up 28% of sales, will also be taxed at the lower 5% rate instead of 18%.
Additionally, juices, digestive products, and toothpowder, which account for 25% of Dabur’s sales, will see a reduction from 12% to 5%. Hindustan Unilever (HUL) expects similar benefits, as about 37% of its total revenue from products such as soaps, shampoos, and health drinks will shift from an 18% GST rate to 5%. Products like sauces, jams, and noodles, making up around 3% of sales, will also see a reduction from 12% to 5%.