Jewellery stocks zoomed by up to 17 per cent today following the GST Council's decision to tax gold and gold jewellery at 3 per cent.
Shares of Titan Company shot up by 16.97 per cent, PC Jeweller surged 9.38 per cent and Tribhovandas Bhimji Zaveri gained 5.43 per cent on BSE.
Among others, Gitanjali Gems gained 3.36 per cent and Thangamayil Jewellery rose by 1.79 per cent.
"Indirect tax rate for jewellery have been made slightly higher at 3 per cent than exiting rate of around 2 per cent but was lower than fears of 5 per cent rate. We believe that this will not make too much of a difference to the category," Motilal Oswal Securities said in a report.
Gold will become slightly costlier as the current incidence is 2 per cent and after "extensive debate" the Council proposed to tax gold and gold jewellery at 3 per cent.
Finance Minister Arun Jaitley on Saturday said while some states wanted a 2 per cent tax rate, others were in favour of a 5 per cent tax on gold and hence the Council decided on a "vertical division".
"At present, gold is taxed at 2 to 2.5 per cent and this marginal increase will not affect the players involved in the industry (nor bullion dealers nor consumers) in a big way, nor it will bring in prosperity to the government. This will help bring standardisation of rates across the country," said Prathamesh Mallya, Chief Analyst- Non-Agri Commodities & Currencies, Angel Broking.
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