Goods and Services Tax (GST) in India: Towards Sustainable Economic Growth

Abstract

Goods and Services Tax (GST) has been newly introduced in India. Not only will GST help India to adjust with the global taxation system, but it will also help the Government of India to increase its Tax to GDP ratio. The main objective of the study is to understand the GST launched by the government and to analyze its impact on the financial performance of the companies. The data for four industrial sectors (two industrial goods and two consumer goods) has been taken, namely, cement industry, steel industry, automobile sector and communication sector. A total of 78 companies were taken as the sample and quarterly results related to various financial parameters such as net sales, total expenses, net profit, earnings per share, price-earnings ratio and turnover were collected from the Prowess database. The data was collected for two quarters before and after the implementation of GST on July 1, 2017, so that the impact of GST implementation could be studied across sectors on various performance parameters. The analysis shows that introduction of GST has brought in a positive change in the performance of all sectors selected for this study.