Pack of 10 Gold Flakes costs Rs 150: ITC increases the price of cigarettes due to GST

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The ITC increased the prices of some brands of cigarettes to pass on the 6-7% increase in the additional tax on cigarettes.

Sameer Deshmukh, research analyst at Reliance Securities, said the price increases were 6-15% for all brands, with the average hike coinciding with the 6-7% increase in effective taxes for the tax on products and services.

An ITC statement said that the prices of its Classic and Gold Flake brands had been increased to Rs 150 for a pack of 10. Wills’ price was increased to Rs 94 for a pack of 10. Wills Flake is now priced at Rs 66.

The GST Council at its July 17 meeting increased the compensation tax from Rs 485 to 792 per thousand cigarettes. A 31 percent increase in the ad valorem component of the royalty was collected in the “other” category.

“The prices of some brands have been revised. There is adequate availability of stocks in the market, ”said an ITC spokesperson.

The company said the price hike would be immediate. “For cigarettes manufactured or packaged before July 18 and which have not yet been sold to consumers, the maximum retail price is revised,” said the notice.

The GST Council, after reducing the additional tax on cigarettes by 6% earlier this month, revised the rates on July 18.

“The price increase will affect sales and therefore the turnover of the company. However, as ITC passes the additional tax burden on to consumers, its operating margins will remain stable, ”Deshmukh said.

Industry executives said the effective tax hike for 2017-18 was 16-17% if the previous 6% increase announced in the budget was taken into account.

The ITC certificate reacted positively to the price revision and climbed 1.63% to Rs 293.20 on BSE.

The shares of other cigarette makers like Godfrey Phillips, VST Industries also reacted positively.

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