Indian share markets continued to witness selling pressure in the afternoon session amid weak international markets. At the closing bell, the BSE Sensex stood lower by 364 points, while the NSE Nifty finished down by 89 points. Meanwhile, both the S&P BSE Mid Cap & S&P BSE Small Cap indices finished down by 0.6%. Losses were largely seen in FMCG stocks, realty stocks, and oil & gas stocks.

Asian stock markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.35% and the Hang Seng rose 0.21%. The Nikkei 225 lost 0.59%. European markets are mixed. The FTSE 100 is higher by 0.01%, while the DAX is leading the CAC 40 lower. They are down 0.53% and 0.18% respectively.

The rupee was trading at Rs 64.33 against the US$ in the afternoon session. Oil prices were trading at US$ 46.17 at the time of writing.

In view of the reduction in tax on the demerit good under the new indirect tax regime, the Goods and Services Tax (GST) Council, at its 19th meeting headed by Finance Minister Arun Jaitley, decided to increase the cess applied on certain types of cigarettes by as much as 31%. The cess on these items is over and above the 28% GST rate applied to them.

This was the only item on the agenda for the meeting. The increase in cess would bring in Rs 50 billion of additional tax revenue which otherwise would have gone to the manufacturers. However, cigarette prices will not change because of the increased cess which became effective from July 18.

As per the official statement ‘In respect of cigarettes, the Fitment Committee had recommended that in line with the weighted average VAT rate (28.7%) the GST rate on cigarettes may be kept at 28%”. However, this method of calibrating the compensation cess did not take into consideration the cascading of taxes. As a result, the total tax incidence on cigarettes in GST regime has come down, as compared to the total tax in pre-GST regime. Hence, it decided to increase the compensation cess on all cigarettes.