Although inclusion is positive for the sector, profits remain subdued, according to Kotak.
There could be an overall reduction in value-added tax rates, he added. For Mahanagar Gas, in particular, the brokerage noted that since April 2022, local VAT rates have been reduced to 3%, from 13.5% previously. As a result, the bulk of the benefits of the tax cut are overdue.
The government will not appreciate a big impact on revenue since few states, like Gujarat, would need to be compensated, the brokerage said. He expects the GST rate on gasoline to be 12 or 18%. The government cannot apply the 5% brackets or the highest 28%, since the main objective of this decision is to promote the use of gas in the country, he said.
