Shares of ITC, one of the country’s largest cigarette manufacturers that own brands such as Insignia, Classic, Gold Flake, Navy Cut, Capstan, and Berkeley, slipped nearly 3% in opening trade on Tuesday amid a report that the tax slab for cigarettes, aerated beverages, and other related products to be hiked to 35%. The shares of Four Square-maker Godfrey Phillips and Charminar manufacturer VST Industries were also under stress today, falling up to 3%, in an otherwise positive broader market.

Reacting to the news, the shares of ITC declined as much as 2.7% to ₹464.10 in the early trade. In a similar trend, Godfrey Phillips shares tumbled 3.1% to ₹5,575.50, while VST Industries stock declined 2.3% to ₹318.30 on the BSE.

Meanwhile, the equity benchmarks BSE Sensex and NSE Nifty opened higher today and were trading marginally above base line at the time of reporting.

The Group of Ministers on GST rate rationalisation has proposed a new tax slab of 35% for tobacco and related products and aerated beverages, as per media report. Currently, all these 'sin' products come under a tax slab of 28%.  

"The GoM has agreed to propose a special rate of 35% on tobacco and related products and aerated beverages. The four-tier tax slab of 5, 12, 18, and 28% will continue and a new rate of 35% is proposed by the GoM," news agency PTI quoted an official as saying this.

A meeting of the GST Council, chaired by the Finance Minister, is scheduled in Jaisalmer on December 21 and the council will take a final call on this tax proposal. The GST Council is also expected to consider the proposal of GST on life and health insurance premiums, says the report.

At the 55th GST Council meeting, the panel is expected to consider the inputs of the GoM on rate rationalisation on the overall tax rate structure, in light of the overall GST collections. The GST Council may also consider the status of the setting up of the GST Appellate Tribunal, says Maulik Manakiwala, Partner, Indirect Tax, BDO India.

“One of the major expectations from the 55th GST Council meeting is the reduction of GST incidence on health insurance and term insurance. While a relief on the rate of GST on health insurance is widely expected, the form and quantum of relief is something that the Council would need to decide,” says Manakiwala.

In addition to these, the GST Council is also likely to consider amending the GST rates on some products, such as a reduction in the rate for exercise notebooks, and bicycles costing less than ₹10,000 and increasing the rate of GST on watches costing more than ₹25,000 and shoes costing more than ₹15,000, he adds.

(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)