Friday, December 11, 2015

morning thoughts...

The markets remained in a range and will continue to do so in the coming session.
As developed countries across the world are moving towards a strict regulatory stance against smoking, developing economies like India are also facing the heat. Measures such as ban on smoking in public places and pictorial graphic warnings on cigarette packs have already been implemented in India. Apart from that, the government has been raising excise duty on cigarettes. While cigarette companies had been passing on the incremental duties by raising prices, successive hikes in the past four years is adversely impacting their sales.Cigarette companies are of the opinion that punitive taxation does little to curb tobacco consumption that find its way through counterfeit cigarettes or other forms such as bidis and smokeless tobacco. However, relief for domestic cigarette companies is not likely. As per a report by World Health Organization (WHO), the tax incidence as a proportion of retail price of cigarettes in India is still lower than countries such as Bangladesh, Sri Lanka and Thailand. Therefore, it is no surprise that the government committee has recommended a higher GST rate of 40% on tobacco and related products. The standard GST rate is in the range of 17-18%.Implementation of GST will remove multiple taxes at state and centre levels and usher in a uniform tax rate. This will benefit cigarette companies that have been subject to a plethora of tax rates. Presently, cigarette companies pay excise duties in the range of 30%-52%. It is to be noted that ITC has a lower excise incidence due to presence in consumer goods and paper that are not so heavily taxed. But with no clarity on the quantum of benefits to accrue from GST implementation, the likely impact of a higher GST rate for cigarette companies continues to remain in the realm of conjecture.
Friday wealth gains
Sell gold , silver , copper
Buy tata steel 240 ca , pfc 200 ca
Buy jindal steel , trf , titan
Sell axis bank , yes bank
Buy nifty and bank nifty on dips and sell on rise