The new two-slab structure under “GST 2.0,” approved by the GST Council, is expected to transform consumption patterns and create opportunities in the stock market, as per analysts.
The updated rates, which are part of the Centre’s “GST 2.0” initiative, will take effect on September 22. The Council also confirmed that it will not meet again on Thursday and has extended the compensation cess until October 31.
The restructuring removes the current 12% and 28% tax brackets, a change intended to simplify compliance and boost consumption in various sectors.
Sectors such as fertilizers, renewable energy, textiles, and apparel are set to benefit significantly from the reduced tax rates. During its 56th meeting on Wednesday (September 3), the GST Council sanctioned extensive reforms to the indirect tax system, establishing a dual-rate structure of 5% and 18%, along with a unique 40% tax on tobacco, pan masala, and other luxury items.
Stocks to benefit most after GST Council meeting
Auto Stocks
In its report, brokerage firm Emkay mentioned that the reforms comprise significant tax reductions across various auto segments while also tackling industry concerns regarding the inverted duty structure (all auto components are now uniformly taxed at 18% compared to the previous range of 18-28%); the stability of EV taxation at 5% is expected to provide further support for the ongoing shift towards electrification.
This targeted tax relief in the automotive sector could lead to a potential demand increase of 5-10% across different categories .Contrary to common expectations, Mahindra & Mahindra (M&M) is identified as the primary beneficiary of GST reductions. Maruti Suzuki India and Hyundai Motor India are projected to experience similar advantages. In the two-wheeler segment, Hero MotoCorp, Eimco Elecon, and TVS Motor Co are expected to be the key beneficiaries.
Cement Stocks
Major cement companies such as UltraTech Cement, Ambuja Cements, Shree Cement, ACC, and Dalmia Bharat will be under focus.
As per reports, the reduction of GST on cement from 28% to 18% is expected to lower construction and housing expenses, subsequently increasing demand for infrastructure and real estate initiatives.
Insurance Stocks
HDFC Life Insurance, SBI Life Insurance, Niva Bupa, and others will be in the spotlight today following the GST Council’s decision to exempt individual life and health insurance from the GST.
Moreover, the reinsurance costs will also be exempt from GST. This indicates that life and health insurance policies will no longer be subject to any GST charges.
Fertiliser stocks
As per reports, companies in the fertiliser and agrochemical sector, including PI Industries, UPL, and Rallis India, are likely to benefit as the GST on fertiliser acids and bio-pesticides is lowered to 5% from the previous rates of 12–18%.
Renewables stocks
The renewable energy industry is poised to gain as the tax on solar cookers, solar water systems, and associated components is reduced to 5% from 12%, providing an advantage to firms like KPI Green Energy, Adani Green Energy, Tata Power, and Sterling & Wilson Renewable Energy, as per reports.
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