Ramifications of Goods and Services Tax on the Share Returns of Automobile Companies in India

Abstract

The implementation of Goods and Services Tax in India was an important milestone in the history of India’s economic reforms. The country had entered a new era of tax reforms and it was surging towards unification of the distorted indirect tax structure which was existent so far. The proponents of GST reiterated that it will end tax terrorism and bring in greater transparency and accountability for all the stakeholders concerned. The introduction of GST has resulted in far reaching impacts on every sector of the Indian Economy. The Automobile industry in India is one of the top and flourishing sectors in the economy. Before the introduction of GST, the automobile sector was reeling under the strain of multiple taxes and high tax rates. After GST, with its mantra of ‘One nation, one tax, one market’, the automobile sector is expected to benefit with the subsuming of many indirect taxes and cesses. The study is conducted to find out the implications of the implementation of GST on the share returns of selected automobile companies in India. For conducting the analysis, 3 month, 6 month and one year pre and post GST implementation share return data were taken and appropriate statistical tools were applied to find impact of GST on share price return. The study found that in case of the selected companies there was no significant difference in the share returns before and after the implementation of GST. The event analysis also found that GST had no impact even on the day of its implementation.