ITC, Godfrey Phillips, Nazara Tech, Delta Corp, Varun Beverages: How sin stocks reacted as Centre imposed 40% GST

Shares of tobacco, aerated beverage, and online gaming companies remained in focus on Thursday after the Goods and Services Tax (GST) Council proposed a 40% GST slab for sin goods under the new framework.

As part of GST 2.0, the government has simplified the existing four-slab structure (5%, 12%, 18%, 28%) into two principal slabs — 5% and 18% — along with a special 40% rate for luxury and sin goods.

The sin goods category covers aerated and carbonated beverages, caffeinated and other non-alcoholic drinks, as well as high-end items such as motorcycles above 350cc, helicopters, and yachts. However, products like pan masala, cigarettes, gutka, beedi, and other tobacco items will continue to attract the existing 28% GST rate for now. Their shift to the new 40% category has been deferred until pending loans and compensation payouts are fully settled.

For aerated beverages, the GST rate has been revised to 40%, compared to the earlier structure of 28% GST plus a 12% compensation cess. The move is likely to impact Varun Beverages (VBL), a key player in the segment.

For cigarettes, the GST rate will also move to 40% on the retail sale price (MRP basis). This would impact sectoral players such as ITC, Godfrey Phillips, VST Industries, NTC Industries, and others.

In the case of online gaming, the GST Council has introduced a 40% tax on casinos, lotteries, betting, horse racing, gambling, and online money games under a new slab for luxury and demerit services. This is expected to dent investor appetite for online gaming stocks such as Delta Corp and Nazara Technologies.

Here’s how sin stocks reacted as the centre imposed 40% GST:

The shares of cigarettes-to-FMCG conglomerate ITC rallied over 3% after the government rationalised GST rates across consumption categories. Currently, for ITC, the MRP-to-tax per stick ratio stands at 47–48%, making the move marginally positive in the near term, according to JM Financial.

“However, we expect the government to eventually make the tax incidence neutral through changes in excise duty, either in the Union Budget or in future GST meetings. While all the GST rate changes will be effective from September 22, the current GST structure on cigarettes and tobacco products will continue until the loan (taken to offset the revenue shortfall) is repaid, likely within this year as per the FM,” the brokerage said in the report.

Other cigarette stocks such as Godfrey Phillips and VST Industries were up around 2%, while NTC Industries was down 1%.

In the online gaming space, Delta Corp shares plunged over 6%, while Nazara Technologies lost over 2%. Recently, Parliament passed the Promotion and Regulation of Online Games Bill, 2025, which proposed banning online money-based games.

Among others, Varun Beverages (VBL) , which manufactures and distributes beverages, declined nearly 2% after the government proposed a hike in the GST rate on caffeinated beverages.

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