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ITC Jumps 9% After GST Cut On Hotel Room Tariffs, E-Cigarette Ban

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On Monday, shares of ITC Limited jumped more than 9 percent after various government announcements that were in favour of the conglomerate's businesses.

 

The stock touched an intraday high of Rs 260.50 on NSE.

ITC Jumps 9% After GST Cut On Hotel Room Tariffs, E-Cigarette Ban

On Friday, the GST (Goods and Service Tax) Council cut tariffs on hotels in a bid to push growth in the domestic tourism industry.

GST rate on daily room tariff above Rs 7,500 per day was lowered from 28 percent to 18 percent. Room tariffs between Rs 1,000 and Rs 7,500 per day will attract 12 percent GST and no GST will be charged on room tariffs up to Rs 1,000.

GST on outdoor catering was slashed to 5 percent from 18 percent, however, no input tax credit (ITC) was to be made available on it.

ITC runs the second largest chain of hotels in India.

As for its tobacco business, there was no increase in cess announced on cigarettes by the GST Council. Further, the government on 18 September announced a ban on manufacture, import, sale, distribution and advertisements of electronic cigarettes amid growing concerns of health risks from vaping.

 

A major part of its revenue comes from the sale of cigarettes, which means that a ban on e-cigarettes could help it regain its lost volume of sales.

According to a note by Jefferies India, e-cigarettes would have otherwise resulted in a potential loss of market share in the medium term for ITC.

Read more about: itc gst cigarettes
Story first published: Monday, September 23, 2019, 11:30 [IST]
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