As GST looks ready to roll, D-Street turns focus on 40 stocks that can gain

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NEW DELHI: The goods & services tax (GST), which aims to bring the country under a unified tax regime, can finally become a reality as the Finance Minister has managed to get the support of virtually all states, except Tamil Nadu.

Finance Minister Arun Jaitley met finance ministers of 22 states and representatives from seven others in Kolkata on Tuesday to resolve the issues and a broader consensus has been evolved. All eyes are now on the monsoon session of Parliament for the NEW DELHI: The goods & services tax (GST), which aims to bring the country under a unified tax regime, can finally become a reality as the Finance Minister has managed to get the support of virtually all states, except Tamil Nadu.

Finance Minister Arun Jaitley met finance ministers of 22 states and representatives from seven others in Kolkata on Tuesday to resolve the issues and a broader consensus has been evolved. All eyes are now on the monsoon session of Parliament for the passage of the constitutional amendment bill.
It appears that the objection to the cap of GST rate and the demand for its inclusion in the constitutional amendment bill, as sought by the Congress-run states, has been ruled out, Finance Minister told reporters in Kolkata.

Jaitley said the two contentious issue about a revenue-neutral rate and dual control of state and Centre on certain taxation would be deliberated at a meeting scheduled for July when the empowered committee will meet again.

The domestic market closed flat with a negative bias on Tuesday but recouped most of the losses on hopes of the GST bill getting through. If implemented, GST can actually lift India’s GDP by 2 per cent, experts said.

The government’s previous attempts to get the GST bill passed in Parliament have been hampered by the lack of its majority in the Upper House. Recent elections to he Rajya Sabha raised hopes of passage of GST.

For the constitution amendment bill to be passed in the Rajya Sabha, two-thirds of the members present should in favour of the legislation.

“The market has rallied up on expectations of what is likely to happen if the GST gets through. There is a reasonable probability that we should be able to scrape through it this time without Congress support,” NiravBSE 4.98 % Sheth, EdelweissBSE 4.81 % Securities, said in an interview with ET Now.

The Congress party said it would back the GST bill if the government agrees to cap the tax rate at 18 per cent and create an independent mechanism to resolve disputes on revenue sharing between states.

There was complete consensus on the fact that there should not be a constitutional cap because contingencies might arise in future. “The quantum of taxation is fixed by the GST committee and it is best to be left to the discretion of the committee,” Jaitley said.

Even though the implementation of GST is some time away (April 1, 2017), stocks may start discounting the impact sooner than expected. Sectors such as logistics, auto, consumer staples, hospitals, appliances and manufacturing are likely to benefit most from GST.

The GST implementation will widen the tax net and it will be very difficult for companies to escape paying taxes. This would benefit companies that operate in sectors or areas that have a large number of unorganised players

“Logistics is the theme to play and there are plenty of good stocks such as AllcargoBSE -0.82 % or Gateway DistriparksBSE 2.97 %. I think there is a valuation comfort out there with good RoEs and strong businesses in place,” Dharmesh Kant, VP-Head Retail Research, Motilal OswalBSE -0.30 % Securities.

“Concor is a quality stock but this is a very expensively valued, so there would be much scope left out there,” he added.

Sources:http://economictimes.indiatimes.com/markets/stocks/news/as-gst-looks-ready-to-roll-d-street-turns-focus-on-40-stocks-that-can-gain/articleshow/52757477.cms

 

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