Bata India, Metro Brands, Campus Activewear, and Mirza International were among the footwear stocks that surged up to 10.5% in intraday trade on Thursday, September 4, as investors cheered the GST rate cut on footwear, lifting hopes of improved demand and margins for these companies.
The GST Council, chaired by Finance Minister Nirmala Sitharaman, on Wednesday announced a cut in GST on footwear priced up to ₹2,500, reducing the rate to 5%.
Previously, the 5% GST slab applied only to items priced up to ₹1,000, but with this move, the benefit has now been extended to products priced up to ₹2,500 apiece.
Following the announcement, footwear stocks opened the session with a gap-up and extended gains through the day. Bata India rose 7.3% to an intraday high of ₹1,247, Metro Brands gained 6% to ₹1,242, and Campus Activewear jumped 10.4%.
Other footwear companies, including Mirza International, N B Footwear, Lehar Footwears, Khadim India, and Relaxo Footwears, also advanced between 1% and 6%.
The GST Council, on September 3, approved a major simplification of the tax structure, collapsing four tax slabs (5%, 12%, 18%, and 28%) into just two slabs: 5% and 18%.
A special 40% rate will apply to select luxury and sin goods, a major change since the GST rollout in 2017, which is part of government reforms along with other fiscal measures like RBI rate cuts and income tax rebates, which are poised to recharge consumer demand.
The rate has been slashed across the key items, with new rates coming into force from September 22, the first day of Navaratri.
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