- 7 months ago
The Nirmala Sitharaman-led GST Council overhauled the complicated indirect tax regime, announcing sharp reductions in rates on food and daily essential items as well as consumer durables like TVs and refrigerators.
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00:00It's just past 9 a.m. and we're here to get you ahead of the curve as markets kick off trading for the day.
00:06From the big overnight queues on Wall Street and global markets to the buzz around corporate earnings,
00:11policy moves and stock-specific action.
00:13We break it all down so you know exactly what to watch.
00:16Stay tuned as we track the Sensex, Nifty and stories that will drive the market mood today
00:21and catch us again at market closing with my colleague Sakshi Badra.
00:24First, a look at the top news.
00:26The biggest reforms yet in goods and services tax cleared in just a day instead of two.
00:33Markets are just as surprised as you and I are.
00:36All sectors from insurance to FMCG, agriculture to consumer durables
00:41are expected to celebrate the streamlining of the system.
00:45Reports say the new system could also reduce the government's subsidy burden.
00:48All middle-class consumables to be placed under two tax slabs instead of the current four.
00:59Household goods, food items, snacks, ACs, TVs, fridges, medicines.
01:03All will be cheaper when the new GST rates and rules kick in 17 days from now.
01:08GST also slashed on small cars, commuter two-wheelers, construction materials and textiles.
01:14Industry body CII says companies will pass on the benefits of lower GST to consumers swiftly.
01:26It added that it will partner with the government to ensure a smooth, timely rollout
01:30that lifts demand and supports jobs.
01:32Rules on how goods in stock are to be treated will be issued soon.
01:36GST rates reduced on farm machinery and fertilizer inputs from the current 12% and 18%
01:45to just 5% and even nil on several food items.
01:49The move is expected to give a boost to rural demand and ease of cost pressures on farmers
01:54and will have a cascading impact on the economy, especially in rural India.
01:58Small businesses gain big.
02:03GST laws change to make it easier for small businesses to get registered.
02:08New rules also allow for quick refunds on provisional basis.
02:11Appeals and hearing process before the GSTAT also streamlined,
02:15resolving a long-standing demand of taxpayers.
02:23Markets, of course, are going to cheer this news.
02:25Let's take a look at the pre-open and what it's looking like, what it's indicating.
02:29Expect a gap up.
02:30We're already seeing Tractormaker escorts at a record high.
02:34We're seeing Hindustan Unilever at a 52-week high.
02:36The Nifty is up over a percent.
02:38As was expected, that GST chair kicking in already in pre-open.
02:42Remember, we're also seeing global queues and an expected cut from the Fed.
02:47And that's also leading to positive sentiment when it comes to global queues.
02:51But really, the focus today will be on the impact on domestic counters,
02:56on the kind of cheer we're seeing post these mega GST reforms.
03:00Pre-open there.
03:01Nifty Auto, 3.5% higher.
03:04It's really seeing a fantastic shift coming in post some of those norms announced last night.
03:10Huge for the consumption segment.
03:12So keep an eye out on auto.
03:13Keep an eye out on all your consumer durable stocks as well.
03:17HUL already at a 52-week high.
03:19Escorts already at a live high coming in.
03:21So lots of action there.
03:23Keep an eye out on food items, for instance.
03:26And across the board in the broader markets, we'll be seeing that impact play out.
03:29But look at some of those auto names, top of the charts.
03:31M&M up 7%.
03:33Ayesha up 5% in pre-open.
03:35And we're just about a few minutes away from market opening today.
03:37It's looking good.
03:38And that cheer also moving across the markets.
03:41Your consumer durable majors, HUL up over 3%.
03:44ITC following suit as well.
03:45And we will also start to see short covering coming in as we see a gap up in the markets.
03:52Let's see then post that if we start to see some profit booking as well.
03:55But clearly we're heading in for a good open this morning.
03:58Post that GST news.
03:59The GST council has pulled off in one day what was expected to take two,
04:05rolling out the biggest tax reform since 2017,
04:08led by Finance Minister Nirmala Sitaraman.
04:11The council has simplified India's GST structure to just two slabs,
04:145% and 18% with a nil rate for essentials and 40% for sin and luxury goods.
04:20Insurance premiums, life-saving drugs, basic foods like roti, paneer,
04:24these are all now exempt.
04:28This reform is not just on rationalizing rates.
04:33It's also on structural reforms.
04:35It's also on ease of living.
04:37It was expected to take the GST council two days,
04:44the 3rd and the 4th of September,
04:46to bring about the biggest reforms in the goods and services tax.
04:50But it took just one day for the apex GST body,
04:55headed by Finance Minister Nirmala Sitaraman
04:57and comprising the finance ministers of all states,
05:01to reach its decision on sweeping reforms.
05:04Eight years after the goods and services tax replaced a slew of central and state taxes,
05:12subsuming them into one nation, one tax,
05:15the GST council made the structure less complicated
05:18by replacing four tax brackets with just two.
05:22The previous slabs of 5, 12, 18 and 28%
05:25will be replaced by two slabs of 5 and 18%.
05:29There will be a nip slab as well and a 40% slab for sin and luxury goods.
05:36All this will be effective 22nd September 2025,
05:42which is the first day of Navaratri.
05:44The changes in GST rates of all goods,
05:50except for paan masala, gutka, cigarettes, chewing tobacco,
05:55products like Zarda and manufactured tobacco, BD,
05:59will be implemented with effect from 22nd September 2025.
06:06Except for these,
06:08insurance premiums, both for life and health policies,
06:11will now be exempt from GST.
06:13There is also total exemption of several life-saving,
06:17cancer drugs and medicines for rare diseases.
06:20Ultra-high temperature milk,
06:22chhena and paneer and indian breads
06:24like roti, chapati and paratha are also exempt.
06:29The 5% slab will include items for the middle class
06:32like hair oil, soaps, shampoos, cycles,
06:36kitchenware, household articles, food items,
06:39spectacles, man-made textiles and yarns,
06:42as well as items for agriculture used like pesticides,
06:46horticulture and agri-machines including tractors and also on handicrafts,
06:51marble, granite, intermediate leather goods and renewable energy devices.
06:56The higher 18% slab will compromise air-conditioners, all televisions, dishwashers, cars with engine capacity
07:05of under 1200 cc, two wheelers with an engine capacity of under or equal to 350 cc,
07:13all auto parts, tractors, three wheelers, buses, trucks and ambulances.
07:18As expected, sin and luxury goods including tobacco products,
07:24aerated drinks with added sugar, carbonated and caffeinated beverages,
07:30mid and large size cars, large engine two wheelers and personal aircraft and yachts
07:35will attract 40% GST. IPL also moved to 40%.
07:39A lot of industries have already come out and have committed that they will be transmitting this benefits to.
07:47Administratively, both at the state level as well as at the CBIC level,
07:51we will definitely be engaging with the industry
07:53and seeing to it that the benefits to the consumer as is planned as per the exercise
07:59is going to be transmitted to the consumers.
08:03The government expects a net revenue to fall by around 48,000 pro rupees
08:08on consumption figures based in 2023 and 2024.
08:13The centre, however, says the shortfall will be more than made up
08:17by the increase in economic activities.
08:21We have estimated a figure.
08:23We expect that the net fiscal implication,
08:26we would not call it as a revenue loss,
08:29because that doesn't seem to be the correct terminology.
08:32But net revenue implication of this proposal is expected.
08:36We have estimated it to be around 48,000 crores.
08:41The GST rationalization comes at a time
08:44when the industry is facing global trade headwinds
08:47and fresh tariff hikes by the US
08:50have raised concerns about India's export prospects.
08:54Analysts expect the boost in domestic consumption
08:57to offset some of this impact.
08:59Bureau Report, Business Today Television.
09:03All right, Gaurang Shah joining us this morning,
09:08Senior VP, Geojeet Investments.
09:09Gaurang, great to have you on the show.
09:12The impact on market sentiment and otherwise,
09:15the real impact given that we're already seeing a spike
09:17coming in across those auto majors,
09:19specifically Aisha, Maruti, Escorts,
09:22and of course, consumer durables as well.
09:24And we'll dive deep into that impact later.
09:26But what is the kind of real impact you see on sentiment
09:29as well as on market returns on the back of these huge reforms?
09:34Thank you so much, Ava, for having me on India Today morning show.
09:37It's good speaking to you after a very long time.
09:40Morning to all your viewers as well.
09:42So I think right from the time this announcement was made
09:46on 15th of August by the Honorable Prime Minister from the Red Fort,
09:50market has taken this with both the hands.
09:54As we have more clarity, a lot of clarity has emerged overnight.
09:59Today is the last day.
10:00I believe by this evening or tomorrow or this week,
10:03or maybe possibly in the next couple of weeks,
10:06we'll have a white paper giving clarification on the...
10:09Gaurang, I'm going to let you finish your thought of course
10:11to just give me a few seconds.
10:13I'm just going to address market open.
10:15Let's take a look at where we've ticked off for the morning.
10:170.75% higher.
10:19So we are seeing a gap up open.
10:20I don't know, Gaurang, if you were expecting more cheer,
10:22I'm going to come to you on this.
10:23Because as you said, post the announcement,
10:25we were probably already seeing some amount of a tick coming in.
10:28Nifty Bank also trending higher.
10:30We've got, you know, we've got, of course, auto in focus big time.
10:35We've got consumer durables in focus,
10:36even some of those insurance counters from the wider markets.
10:39So we'll pull those up today.
10:40But just first trades on your screen,
10:42the auto index is up 2.5%.
10:44Pull up M&M, pull up Aisha,
10:46pull up Maruti Escorts to just take a look at some of those stocks
10:50because that's really where we're seeing a lot of action this morning.
10:52And of course, you've also got an HUL at a 52-week high
10:55and ITC following suit from the consumer basket.
10:58So we'll just pull up some of those stocks.
11:00Yes, Maruti up about half a percent.
11:02Let's take a look at Escorts.
11:03Let's take a look at Mahindra as well
11:05and pull those up for you on your screen.
11:07Just important to see how some of these stocks are reacting
11:09post the GST news coming in yesterday.
11:11Some big moves being seen across the board on some of these counters.
11:15Aisha is up about 3%.
11:16That's a big one as well.
11:18And we also got some insurance stocks from the wider markets.
11:22Sticking to auto for a moment,
11:24let's pull up Ola Electric as well
11:25and see how that's doing.
11:27Escorts, of course, on the tractor play
11:29is seeing some strong moves coming in.
11:31Ola Electric is actually up 3%.
11:32It's crossed 70 rupees now.
11:35So that's a big move on Ola as well this morning.
11:38So a lot of focus.
11:38So it's been a big week for auto post sales numbers.
11:42Now the GST news and the flip coming in on that front.
11:44So lots of action there.
11:46Gurang, let me come back to you.
11:47Let me allow you to finish your thought
11:48and also, of course, process the kind of reaction
11:50we're seeing on opening.
11:52Well, so Baba was mentioning,
11:53you know, there was excitement
11:54from the time the announcement was made.
11:56We've seen rallies in FMCG autos,
12:00consumer discretionary.
12:01We've seen rally in power insurance.
12:04Basically, all the, you know,
12:05essential items that one needs.
12:09Possibly now that, you know,
12:10things are getting out in public domain,
12:12you might see a little bit of profit booking
12:15purely from a short to medium term point of view.
12:17So if you're a trader,
12:18I think you should possibly, you know,
12:20there's a good old saying,
12:21Abha, in the market that
12:22buy on rumors and sell on news.
12:24So possibly you might see
12:26a little bit of profit booking.
12:27But long term,
12:28I think this is going to play
12:30a huge role in terms of
12:32stabilizing the economy
12:33at the same time,
12:35giving a decent amount of push
12:38to the consumption.
12:39And of course,
12:40it remains to be seen
12:41what is the pass on factor
12:42from the sectors and the companies
12:44which are going to get benefited
12:45out of this GST cuts.
12:47So long term,
12:48still remain positive.
12:49But I think short to medium term,
12:51a lot is there in the price now.
12:53So maybe, you know,
12:54one can possibly take a breather now,
12:57let clarity come
12:59and then possibly take a fresh call
13:01on the sectors
13:02that are going to get
13:03positively impacted by the GST cut.
13:05Okay, wise words coming in there
13:06from Gaurang,
13:07setting the tone really
13:09for what we're seeing
13:09playing out in the markets
13:10this morning.
13:11Let's also get in a reaction
13:12from,
13:14okay, we'll go across to that
13:16a little bit later.
13:17But we've got some news
13:20coming in as well.
13:21Of course,
13:22you know,
13:23what we're looking at
13:23when it comes to the index.
13:25Sensex is now up about 900 points
13:27and the Nifty up about 270 points
13:29post the big news on GST.
13:31Remember,
13:32these are historic reforms.
13:33We're already seeing this
13:34play out politically
13:35in terms of,
13:36you know,
13:36the timing of it
13:37and questioning the government,
13:38et cetera.
13:39But this is critical.
13:40It's a critical boost
13:41coming in economically
13:42currently to boost consumption
13:44and especially
13:45give some relief
13:47to some of those industries
13:48that have been hit
13:49by a lot of the back and forth
13:50on the tariff front as well.
13:52And we are expecting
13:53to see,
13:54you know,
13:54it contribute meaningfully
13:55to the government's
13:56balance sheet as well.
13:57So as Goran said,
13:58the long-term impact
14:00in terms of boosting consumption
14:01and actually seeing
14:02core inflation come down
14:03is going to be,
14:04is expected to be
14:06a real and positive boost
14:07for the economy.
14:08And also coming in,
14:09of course,
14:09just ahead of festive season.
14:10Like we said,
14:12when we just kicked off the show,
14:13they didn't wait
14:14even two days.
14:15They announced it
14:16straight away post the meeting
14:17and these moves are expected
14:19to be implemented
14:20swiftly as well.
14:23Staying on the GST news
14:24for a moment,
14:25let's take a look
14:25at some of those
14:26consumption names, Goran.
14:27And of course,
14:28apart from the fact
14:28that Etchewel and ITC
14:29are up and up strongly
14:31this morning,
14:31it's likely to impact
14:32all the staples,
14:33Britannia, Colgate,
14:35Nestle,
14:35Tarak Consumer,
14:36the entire,
14:37you know,
14:38basket.
14:38If we just go deeper
14:39there for a moment,
14:41you know,
14:41how do you see
14:42the play on consumption
14:43rolling out?
14:44And in terms of
14:45specific stocks
14:46or particular segments
14:47within that basket,
14:48are you going to be
14:49looking at something
14:50in particular?
14:51Well, so before I go
14:52into stock specific,
14:53a small disclosure.
14:55All recommendations
14:56are a part of
14:57our research team
14:57recommendations.
14:59Our company,
14:59Geojit or I,
15:00we do not have
15:01any personal investments,
15:02no financial interests,
15:03no conflict of interest either.
15:05But we give recommendations
15:06to our clients
15:06on similar lines.
15:07They might hold
15:08their investment interests.
15:09So now coming on
15:09to your question,
15:10well,
15:11I think first of all,
15:12a lot has improved
15:13for the entire FMCG sector,
15:14which is of course
15:15part of that,
15:16you know,
15:16non-discretionary
15:17you need to spend
15:18for your day-to-day
15:19consumables.
15:20Last year
15:21and before that,
15:22there was an uptick
15:23in terms of input costs
15:24that is raw material.
15:25That has come down
15:25significantly
15:26to a great extent.
15:28Operational rationalization
15:29and efficiencies
15:31are actually added
15:32to the profitable margins
15:34expanding.
15:35And more importantly,
15:37I think that
15:38along with of course
15:39this GST push,
15:40I think what
15:40the Honorable Finance Minister
15:42did in the budget,
15:4312.75 lakhs,
15:45no tax.
15:45Along with that,
15:46you have a very decent monsoon.
15:48So you're going to have
15:48a huge demand push up
15:51coming in from
15:51semi-urban and rural India
15:52that will take care
15:53of the volume growth.
15:54And if volume growth
15:55is taken care of,
15:56I think you will have
15:57a very decent profitability
15:58number coming in
15:59from the FMCG sector.
16:00So we are positive
16:01on HUL, ITC,
16:02Godrej Consumer,
16:03Tata Consumer,
16:05Darbar, Marico,
16:06Nestle, Britannia
16:07and the list goes on above.
16:09Along with that,
16:09also positive on consumer
16:11non-discretionary
16:12and discretionary items.
16:14Okay, great.
16:15We also have the first
16:15reaction coming in
16:16from Hisashi Tekuchi,
16:18the MD&C of Maruti,
16:19Suzuki India.
16:20Remember Maruti
16:21is India's largest
16:21small car manufacturer.
16:23Let's hear from him
16:24how the GST reforms
16:25will impact sales.
16:26Thanks to the government
16:29strong push
16:31by the GST reform,
16:34I think market outlook
16:35is quite positive
16:36towards H2.
16:38And I think,
16:39I believe,
16:39the market will show
16:41the strong revive
16:42and I think
16:43strong growth
16:44will start happening
16:45in H2
16:46after the GST reform.
16:49Okay, we're continuing
16:50to dissect the impact
16:51across sectors.
16:52Let's pull up
16:53some of those hotel stocks
16:54for you as well
16:54this morning.
16:55Good move coming in there.
16:57LemonTree, Royal Orchid,
16:58so mid-sized hotel counters
17:00are doing well.
17:01Remember,
17:01rooms below the
17:027,500 rupees a day
17:03category will now
17:04have lower GSTs.
17:05So it's immediately
17:06impacting the mid-tier segment.
17:10So Royal Orchid Hotel
17:10is up 2.5% right now.
17:12LemonTree also doing good
17:14this morning
17:14and it's up about
17:163% higher.
17:17So gradually,
17:18we're just taking you
17:19through the impact
17:19across some of these segments.
17:21Loads of sectors
17:22and loads of companies
17:23that are likely
17:24to be impacted positively
17:25on the back of this.
17:26Now, let's take
17:27a closer look,
17:28whether it's
17:29consumer durables,
17:30ACs, TVs, dishwashers,
17:32we've seen rates
17:32cut to 18% from 28%.
17:34That means a demand boost
17:36for Voltas,
17:37for Havels,
17:37Whirlpool,
17:38Dixon,
17:39Amber,
17:40and we'll continue
17:41to bring up
17:41some of those names
17:42for you as well.
17:43But a huge positive,
17:45whether it's for
17:45cement names
17:46across the board
17:47and we'll talk to
17:48Gorang about that
17:48in a moment
17:49and of course,
17:49we were just discussing
17:50those FMCG stocks as well
17:52and we're already
17:53seeing that play out.
17:54Remember,
17:55beverages,
17:55tobacco,
17:56aerated caffeinated drinks,
17:58these will still be taxed
17:59and higher at 40%.
18:00So it's a negative
18:01coming in for
18:02something like
18:04a Godfrey Phillips
18:05on the tobacco front.
18:07Agriculture and fertilizers,
18:08tractors,
18:09irrigation equipment,
18:10all of these
18:11also will see
18:12a lower rate cut
18:13down to 5% as well.
18:15Positive,
18:16as we've been discussing,
18:17for an M&M,
18:18an Escorts,
18:19Kubota,
18:19Coromandel,
18:20Chambal,
18:21GNFC,
18:22so fertilizer stocks
18:23will benefit as well.
18:24Coal and power,
18:26JST on coal
18:26and lignite
18:27has been hiked
18:28to 18% from 5%.
18:30So there we'll of course
18:31see a reverse impact
18:33coming in.
18:34Now the cost push
18:35is also negative
18:36for NTPC
18:37and JSW Energy.
18:38So from a market standpoint,
18:39important to just flag
18:40that for you as well.
18:42And renewables,
18:44solar,
18:44wind,
18:45biogas devices,
18:46these will now
18:46be taxed at 5%.
18:48So positive
18:49for Suzlon,
18:50Inox Wind
18:51and Tata Power.
18:52So NTPC
18:53is just marginally
18:54in the red today
18:54but let's pull up
18:55a Suzlon,
18:56an Inox Wind,
18:57a Tata Power
18:57and we'll see
18:58if some of those
18:59are reacting as well.
19:01I think the major
19:01play this morning
19:02in the market
19:03is clearly
19:03the consumption story
19:04and perhaps
19:05some of the other
19:06information is yet
19:07to sort of
19:08be processed
19:09by the market.
19:10So Suzlon's
19:10up about 0.8%
19:12this morning.
19:14We've got
19:15Pharma of course,
19:16either exempt
19:16or taxed at 5%.
19:18So positive
19:18on some of those
19:19Pharma names
19:19of course
19:20and paper,
19:21packaging,
19:22education,
19:22these are now
19:23exempt.
19:24So that's a positive
19:25for JK Paper,
19:26for ITC
19:27and so on.
19:28Gorang,
19:28I'm just running
19:29through a whole host
19:30of stocks and sectors
19:31here but which one's
19:32catching your eye
19:33and which are some
19:34of the other?
19:35Even Gorang smiling.
19:36Yeah,
19:36it's a huge boost.
19:38So which are the
19:39other segments
19:39that you feel
19:40will see a longer
19:41term impact?
19:42JK Paper this morning
19:43is up 4%.
19:44So clearly markets
19:45are liking that one.
19:46Well,
19:46I think cement also,
19:48Abha.
19:48I mean,
19:48the list can go on,
19:49Abha.
19:49I think we can possibly
19:50talk for a long time
19:52on this because there
19:53are a lot of sectors,
19:54a lot of products,
19:55goods and services
19:56that will come under this
19:57and we get more clarity.
19:58But I think cement,
19:59I mean,
19:59cement was something
20:00that was a longstanding
20:01demand from the industry
20:03to bring it under
20:04a lower tax bracket.
20:06It was at 28%,
20:07correct me if I'm wrong,
20:08Abha.
20:08And this is one sector
20:11that normally
20:12not many people speak about
20:13given the fact that
20:14you have huge
20:15infrastructure push.
20:16Either it is the government
20:17at the center
20:18or government at the state.
20:19You have real estate sector
20:20doing buzzing actually,
20:21doing very,
20:21very well.
20:22Real estate sector
20:23happens to be
20:24the second largest
20:24consumer of cement
20:25water which is produced
20:26in India.
20:27And along with that,
20:28I was listening to
20:28the management of L&T
20:29and they're quite confident
20:32and they are quite positive
20:33about private CAPEX
20:34getting back on track.
20:37So, effectively
20:38lowering GST slab
20:41for cement
20:41and possibly
20:42kind of consumption
20:43demand that is there
20:44along with,
20:45of course,
20:45lower cost input.
20:47I think cement sector
20:48is also going to do
20:48quite well.
20:49Of course,
20:49other than that,
20:50I think consumer durables,
20:53this is where
20:54the aspirations of
20:55rural India
20:57is going from
20:58maybe a cooler
20:59or a ceiling fang
21:00to maybe an AC
21:01and abuse this
21:03at ground level Abha.
21:04So, I think all these
21:05are going to get
21:05positively impacted.
21:06Okay.
21:07Gaurang, I just want to
21:07pull up Escorts again.
21:09I know we've talked
21:09about it,
21:10but the kind of impact
21:11is the top gainer
21:13really right now
21:13and it's clearly
21:14the, you know,
21:15the play on taxes
21:16on tractors,
21:17but not only are we
21:18going to see
21:19a good monsoon,
21:20lower GST,
21:20we're now going to see
21:21lower interest rates
21:22also.
21:22So, clearly,
21:23it's seeing a boost
21:24across all of these
21:25queues.
21:2611% higher
21:27on an Escorts.
21:28Just a quick call
21:29on this one.
21:30We have been positive
21:32on the entire
21:33AutoPAC Abha,
21:34right from two-wheeler,
21:34three-wheeler,
21:36four-wheelers,
21:37commercial vehicle,
21:38tractor,
21:39agri-equipment,
21:40earth-moving equipments.
21:40In fact,
21:41Escorts Kubota
21:42are not only tractors,
21:43but they make
21:44a range of
21:44earth-moving equipments,
21:46which also plays
21:47a very crucial role.
21:48So, we've been positive
21:49on Escorts Kubota
21:50for some time now,
21:52not very long ago,
21:53given the kind
21:54of opportunity
21:54that exists.
21:56All right,
21:57Goran,
21:57thanks so much
21:57for joining us
21:58this morning.
21:58Great having you
21:59with us here
21:59on the show.
22:01All right,
22:02let me also go
22:02across to
22:03Karishma Asudhani.
22:04She's been tracking
22:04the news,
22:05she's been on ground
22:06and has,
22:07of course,
22:08been tracking
22:08all the insights
22:09and the developments
22:10leading up to this
22:11as well.
22:12Karishma,
22:12take us through
22:13all the latest
22:13and really how
22:14this is now
22:15going to be implemented
22:16and how quickly.
22:16Abha,
22:19we were the first
22:20one to bring
22:20all of these
22:21news rates
22:22to our viewers
22:23and bang on,
22:24most of them
22:25have been announced
22:25by the GST Council
22:27yesterday,
22:28approved by the GST Council.
22:30The big news is,
22:31of course,
22:31on the fact
22:32that they have
22:33simplified
22:34the whole structure
22:35and brought it down
22:36to 5 and 18 percent.
22:38The fact that
22:38now 5 percent slab
22:39will house in
22:40a lot of
22:41common household items,
22:44which is going to be
22:45very beneficial
22:45for the middle class
22:48and 18 percent
22:49has also seen
22:51there has been
22:52a major shift
22:52of goods
22:53from 28 percent
22:55to 18 percent.
22:56The 40 percent slab
22:57remains,
22:58but it's still
22:59lesser than
23:00what it was earlier
23:01because if you see
23:02a 28 percent slab
23:04which exists
23:05currently
23:06plus a SESS
23:07which goes on
23:08to close to
23:08about, say,
23:0922 percent
23:10was resulting
23:10in a 50 percent
23:11total tax.
23:12So even
23:13the SIN goods
23:14and demerit goods
23:15and high-end
23:15premium luxury cars,
23:16they'll be paying
23:17lesser than
23:18what they have
23:20been currently paying.
23:22From September 22nd,
23:23the idea is
23:24to kick this off,
23:25but the 40 percent
23:26slab goods
23:27will take some time
23:28to be implemented
23:30with the new rates
23:31and that is because
23:32of the ongoing
23:33compensation
23:33SESS exercise.
23:36All right, Karishma.
23:37Thanks so much
23:38for joining us
23:38with that.
23:39Tracking the big news
23:40for you this morning,
23:41it's all about
23:42those GST reforms,
23:43historic reforms
23:44coming in overnight.
23:45Markets seeing
23:46a very nice,
23:47strong, healthy response
23:48to that,
23:48up about 175 points
23:50right now on the Nifty
23:51and remember,
23:52it's also Nifty expiry
23:53today,
23:54so some amount
23:54of profit booking
23:55expected a little
23:56later in the day
23:56according to Gorang
23:58and some of our
23:58other experts,
23:59but currently,
24:00we are definitely
24:01seeing a reaction
24:02to some of that
24:03positive news
24:03coming in.
24:05Now, there are also
24:06reports that the cut
24:06in GST rates on food
24:08and the agriculture sector
24:09could help trim
24:09the government's
24:10subsidy burden.
24:11While there is no
24:12official report
24:13on hard numbers
24:13available,
24:14reports highlight
24:14that reducing GST
24:16on tractor,
24:17parts and key
24:18agricultural machinery
24:18from 12%
24:20and even 18%
24:21to 5%
24:22will lower acquisition
24:23costs for farmers
24:24and reduce the subsidy
24:25amount needed
24:26under various schemes.
24:28Biopesticides,
24:29micronutrients,
24:30drip irrigation systems
24:31and machines
24:31for soil preparation
24:32all are now
24:34in the 5% GST bracket.
24:35This makes
24:36agricultural machinery
24:37and inputs
24:38more affordable,
24:38which in turn
24:39reduces the amount
24:40of government subsidy
24:41required to make
24:42these products
24:42accessible to small
24:44and marginal farmers.
24:46Let me go across
24:47to Bipin Sapra,
24:49Leader in Direct Tax Policy
24:50EY India,
24:50who is joining us
24:51this morning.
24:52Bipin, thanks for being
24:53with us.
24:53Tell us what you are
24:54hearing on the subsidy
24:55burden and what the
24:56math is looking like
24:57there and will the
24:58government really see
24:59some relief on that front?
25:00So, I think we are
25:06so what we are hearing
25:11and what we heard
25:12last night was that
25:13there is not too much
25:16of revenue shortfall
25:17which the government
25:18is looking at.
25:20There was a figure
25:21of 48,000 crore
25:22which both the FM
25:23and RS quoted
25:25in their speech
25:27and they were
25:29on the basis
25:29of 2023-24.
25:33That,
25:34how soon
25:36the consumption
25:37boost will happen,
25:40the buoyancy
25:40will come back
25:41and will at the
25:43end of the year,
25:44do we actually need
25:45any support
25:45internally
25:46to impact
25:48the subsidy bill
25:49requires to be seen.
25:51My view would be
25:52that I think
25:53given the
25:54huge number
25:56of changes,
25:57it should quickly
25:58build into
26:00a consumption
26:01boost
26:01and
26:02the amount
26:04of shortfall
26:04should not be
26:05as high
26:06as what is being
26:07anticipated
26:07all around.
26:10Okay,
26:11so a lot of the
26:12concerns,
26:12Vipin,
26:13in terms of
26:13the kind of
26:14compensation to the
26:15states,
26:16added cess,
26:17so forth,
26:18a lot of those
26:18concerns pre the
26:19meet seem to have
26:20completely been
26:21waylaid for now.
26:24Would you say
26:24that overall
26:25the likely
26:26eventual impact
26:27of this is going
26:28to be net positive
26:29then for the
26:29finances of the
26:30government?
26:32That's the
26:33intention of the
26:33government,
26:34ultimately.
26:35It's for the
26:35people benefit,
26:37the whole
26:37country benefits
26:38and the economy
26:39benefits as such.
26:40What we need to
26:41realize is that
26:42when we calculate
26:44revenue shortfalls,
26:47we do not
26:47calculate
26:48how it
26:50is going
26:51to be
26:51how this
26:52will drive
26:53up the
26:53demand.
26:54Because that's
26:55a separate
26:55calculation.
26:56And if we
26:56were looking
26:57at how that
26:58will boost
26:58consumption
26:58and then
26:59a GDP
27:00boost,
27:01there we
27:02look into
27:02all of those
27:03things.
27:04So from
27:05our perspective,
27:06there would
27:07immediately,
27:08maybe in the
27:10month of
27:10October,
27:11there might
27:11be some
27:12shortfalls.
27:13But it will
27:13get picked up
27:14and in
27:15October itself,
27:16there would
27:16be a lot
27:17of sales
27:17happening on
27:18Diwali because
27:19of these
27:20things.
27:20So I
27:21think it's
27:21a factor
27:22of time.
27:23I don't
27:23think there
27:24would be
27:24too much
27:25of shortfall
27:25by the
27:26end of the
27:26fiscal year.
27:26All right,
27:29stay with
27:29us.
27:30Please,
27:30Bipin,
27:30let's also
27:31go across
27:31to some
27:32comments
27:32coming in
27:33after the
27:33big JST
27:34reform.
27:34We spoke
27:35with
27:35finance
27:35ministers
27:36from
27:36Uttar Pradesh,
27:37West Bengal,
27:37Telangana and
27:38Jharkhand here
27:39in some
27:40of those
27:40comments.
27:42Unanimously,
27:435% or
27:4518%
27:46are approved.
27:47And the
27:47issue of
27:48state laws
27:48have also approved.
27:50No,
27:51the revenue
27:51laws will
27:52face.
27:53The larger
27:53interest
27:54is that
27:54the
27:54government
27:54will
27:55benefit.
27:55tax
27:56come
27:56home,
27:57tax
27:57burden
27:57come
27:57home.
27:58The larger
27:58interest
27:59has
27:59all
28:00unanimous
28:00li
28:01ho
28:01gaya.
28:01Finally,
28:02apparently,
28:02there has
28:03been a
28:03consensus
28:03achieved.
28:04I want
28:04to know
28:04if you're
28:05satisfied
28:05with the
28:05fact
28:06that
28:06even
28:07on the
28:08revenue
28:08loss,
28:08ma'am?
28:09We have
28:10spoken
28:10whatever
28:10we had
28:11to say.
28:12Are you
28:12satisfied?
28:13Of course,
28:14yes.
28:14We are
28:15all for
28:15the
28:15common
28:16man
28:16and
28:16middle
28:16class
28:17families.
28:19Yeah.
28:20But on
28:20the
28:20revenue
28:21loss?
28:22That
28:22also
28:24we
28:24brought
28:25to the
28:25notice
28:25of
28:25the
28:26council.
28:27Sir,
28:27big
28:27concerns
28:28there
28:28were
28:29about
28:29the
28:29revenue
28:29loss
28:30especially.
28:30Have
28:31they
28:31been
28:31satisfied
28:31now?
28:32the
28:32JSC
28:33council
28:33chair
28:34person
28:34and
28:35the
28:35whole
28:35government
28:36was
28:37not
28:37in this
28:38position.
28:38The
28:39compensation
28:39is
28:40safe.
28:44They
28:44were not
28:45in this
28:47position.
28:48So we
28:49ultimately
28:50said
28:50that
28:51it's
28:51okay.
28:51Vipin, if we take a look at the overall impact as well on some of these taxes,
29:02are there any segments where you feel perhaps the government can follow through
29:06with some additional measures as well?
29:08They've actually taken into account a whole host of much sought-after reforms
29:13from the industry, and they've addressed those.
29:15But the net impact, for example, on some of these small businesses,
29:19while the finance minister has said it will, of course,
29:22create an ease of doing business for them and so forth,
29:25do you feel that there are some other follow-on reforms that can possibly also come in?
29:30I think that's a very apt question to ask at this moment.
29:34And the government has been talking about a whole package of GST 2.0.
29:41Some of those structural reforms have come through.
29:43So we'll see a reduction in classification disputes.
29:49Earlier refunds, inverted duties going away, simplified returns.
29:54So a lot of it is coming through.
29:56A lot also needs to be done to reduce the cost of compliance of common taxpayer.
30:03And that would be coming from multiple audits which are happening,
30:08streamlining the audit procedure itself,
30:12decriminalization of offenses.
30:14It's ultimately everybody wants to pay the tax.
30:17And only if there is an outright evasion,
30:21those things should be really prosecuted.
30:26But for others, the fear of being of criminalization itself is a deterrent
30:34to join the normal GST process.
30:37So there are a lot of areas and credits.
30:42Credit rationalization, a large part of credits are still held up
30:46and are being blocked because of certain restrictions like real estate,
30:52on cars, on input services, various services, including insurance and others.
31:03So a host of items which need to be rationalized from a credit perspective are also there.
31:10And that in whole would bring the GST 2.0, which is what the government is looking at.
31:17Fantastic.
31:18In fact, since you mentioned insurance,
31:19I just want to pull up some of those insurance stocks as well.
31:23They are reacting post some of these moves coming in today.
31:26So insurance stocks are definitely trending higher at this point of time.
31:31We've also got, you know,
31:33we've also got all of the mid-tier hotel companies doing well.
31:37So Lemon Tree, Royal Orchid.
31:39So we've got footwear also moving this morning.
31:41We've got names like Varun Beverages moving in the broader markets.
31:45So a whole host of stocks in the broader markets that are moving.
31:48And of course, the big moves continue to be on auto and FMCG.
31:52Both of those majors are actually doing pretty well.
31:55Varun has probably slipped a little bit there.
31:56But overall, we're seeing a lot of traction coming in.
31:59Bipin, just final comments from you as well as we close off the show.
32:03In terms of, you know, we've been talking about how the combination of now the lower GST rates,
32:09as well as, of course, how this will lead to lower interest rates with core inflation coming down,
32:14is likely to give a big fillip to the economy.
32:16Any numbers you have in mind as to really what we could see as the resultant impact of this,
32:21you know, in a couple of quarters from now?
32:23Yeah, I think when we were doing those initial calculations and the revenue loss number is the one
32:31which really determines as to how much GDP impact would really come in.
32:37And the numbers vary from 0.5% to 1%, depending upon how much reduction in rate actually gets passed on to the customer.
32:51But at least 0.5% of GDP would be par to say that's where the benefit would be coming in.
32:57And that, I think, is very substantial in any, what we were looking at, the current geopolitical shocks coming in
33:05and the reduction and the impact on GDP because of that.
33:09If not really taking over from there, but at least counter all of those and we should see a normal economic growth happening
33:19irrespective of whatever shocks, external shocks, the tariff shocks which were coming in earlier because of that.
33:25Fantastic. Vipin, thanks so much for joining us and taking us through all that good news this morning.
33:31Remember, keep an eye on those auto stocks.
33:34Keep an eye on your FMCG majors.
33:35We're seeing a lot of traction there today.
33:38We've got Escots, Kubota, the top mover in the markets right now.
33:41We've got stocks hitting record highs as well from the auto pack, 52-week high as well on an HUL.
33:46So lots of action and, of course, also in the broader markets as well.
33:50With that, we wrap this edition of the Business Today show.
33:52Thanks so much for joining us and stay tuned.
33:54Lots more coming out.
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