![Open Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltextgreen.png)
![Restricted Access](https://i-scholar.in/lib/pkp/templates/images/icons/fulltextred.png)
The Rollout of GST and its Impact on the Auto Sector Stocks of National Stock Exchange
Subscribe/Renew Journal
The most awaited and the biggest indirect tax reform in India – Goods and Services Tax (GST) was finally introduced on July 1, 2017. On contrary to the expectations, the automobile industry had severe hiccups during the latter part of 2018, and experienced negative sales growth and the people were jittery about the process of implementation of GST in India. The present study was dedicated to assess and compare the returns rendered by the auto sector stocks listed in the Indian equity market, pre-and postimplementation of GST in India and to understand the level of volatility in the price behaviour of the selected stocks during the study period. To achieve this, we used the daily closing prices of the constituent stocks of auto sector index of National Stock Exchange for 90 trading days pre and post the execution of GST (from February 20, 2017 – November 9, 2017) and relevantly applied the GARCH family models to understand the existence and extent of symmetric and asymmetric volatility in the auto sector stocks. We found that the implementation of GST in India showed a negative impact on the returns delivered by the auto sector stocks and also found abnormal and heightened volatility during the post GST period.
Keywords
Volatility, GARCH Models, Goods And Services Tax, Auto Sector Stocks.
JEL Classification: G10, G11, G12, G15.
Paper Submission Date : January 5, 2020; Paper Sent Back for Revision : May 26, 2020; Paper Acceptance Date : October 20, 2020.
User
Subscription
Login to verify subscription
Font Size
Information
- Adhana, D. K. (2015). Goods and services tax (GST) : A panacea for Indian economy. International Journal of Engineering and Management Research, 5(4), 332–338.
- Agogo, M. (2014). Goods and Services Tax : An appraisal. Paper presented at the PNG Taxation Research and Review Symposium, Holiday Inn, Port Moresby, May 29–30, 2014. Retrieved from http://taxreview.gov.pg/wpcontent/uploads/2014/09/nri.tax_symposium_goods.services.tax_paper_.pdf
- Ahmad, E., & Poddar, S. (2009). GST reforms and intergovernmental considerations in India (Asia Research Centre Working Paper 26). Retrieved from http://eprints.lse.ac.uk/38346/1/ARCWP26-AhmadPoddar.pdf
- Amudha, R., & Muthukamu, M. (2018). Modeling symmetric and asymmetric volatility in the Indian stock market. Indian Journal of Finance, 12(11), 23–36. https://dx.doi.org/10.17010/ijf/2018/v12i11/138196
- Banumathy, K., & Azhagaiah, R. (2015). Modeling stock market volatility : Evidence from India. Managing Global Transitions, 13(1), 27–42.
- Dani, S. (2016). A research paper on an impact of goods and service tax (GST) on Indian economy. Business Economic Journal, 7(4), 264–272. http://dx.doi.org/10.4172/21516219.1000264
- India Brand Equity Foundation. (2018, July). Indian automobile industry report. Retrieved from http://www.ibef.org/industry/india-automobiles.aspx
- Jincy, J. K., Amudha, R., & Muthukamu, M. (2019). Demonetization upshot on the volatility and returns of the banking sector stocks of National Stock Exchange. International Journal of Monetary Economics and Finance, 12(5), 426–444.http://dx.doi.org/10.1504/IJMEF.2019.102955
- Kadir, J. A., Yusof, Z., & Hassan, M. A. (2015, September). Impacts of Goods and Services Tax on income distribution in Malaysia [Paper presentation]. Postgraduate Conference on Economics, Public Administration and Business, Faculty of Economics and Administration, University of Malaya, Kuala Lumpur. Retrieved from https://www.researchgate.net/publication/281630224_Impacts_of_Goods_and_Services_Tax_on_Income_Distribution_in_Malaysia
- Li, L. (2013).The path to Made-in-China : How this was done and future prospects. International Journal of Production Economics, 146(1), 4–13. http://dx.doi.org/10.1016/j.ijpe.2013.05.022
- Liu, C. (2016). Spillover effects in major equity markets : A GARCH BEKK approach. Open Access Library Journal, 3, e2160. https://dx.doi.org/10.4236/oalib.1102160
- Mehra, P. (2015, September 7). 'Modi govt.'s model for GST may not result in significant growth push. The Hindu. Retrieved from https://www.thehindu.com/business/Economy/modi-govts-model-for-gst-may-not-result-in-significant-growth-push/article7625827.ece
- Mishra, A. (2019). Foreign exchange, gold, and real estate markets in India : An analysis of return volatility and transmission. Indian Journal of Finance, 13(7), 50–64. https://dx.doi.org/10.17010/ijf/2019/v13i7/145535
- Nayyar, A., & Singh, I. (2018). A comprehensive analysis of Goods and Services Tax (GST) in India. Indian Journal of Finance, 12 (2), 57–71. https://dx.doi.org/10.17010/ijf/2018/v12i2/121377
- Press Information Bureau. (2018, April 27). GST revenue collections for the financial year 2017–18 [press release]. Retrieved from https://pib.gov.in/PressReleseDetail.aspx?PRID=1530513
- Sharma, A. (2016). GST - A new beginning in Indian financial system. International Journal of Advanced Research in Management and Social Sciences, 5(11), 35–42.
- Shokeen, S., Banwari, V., & Singh, P. (2017). Impact of Goods and Services Tax bill on the Indian economy. Indian Journal of Finance, 11(7), 65–78. https://dx.doi.org/10.17010/ijf/2017/v11i7/116568
- Shukla, S., & Singh, R. (2018). GST in India : Performance of companies after one-year of roll out. Indian Journal of Finance, 12(11), 37–48. https://dx.doi.org/10.17010/ijf/2018/v12i11/138197
- Society of Indian Automobile Manufacturers. (2018, August). Performance of auto industry in 2018. Retrieved from http://www.siam.in/statistics.aspx?mpgid=8&pgidtrail=9
- Vasanthagopal, R. (2011). GST in India : A big leap in the indirect taxation system. International Journal of Trade, Economics and Finance, 2(2), 144 –146. https://dx.doi.org/10.7763/IJTEF.2011.V2.93
- Vijisha, P. (2017). Impact of GST in boosting the trade across India. EPRA International Journal of Research and Development, 2 (8), 59–65.
- Zhou, L. Z., Tam, J., & Heng, J. (2013, October). The introduction of Goods and Services Tax in Malaysia: A policy analysis (CPPS Policy Paper Series). Centre for Public Policy Studies. Retrieved from http://cpps.org.my/wp-content/uploads/2017/08/23101356CPPS-Policy-Paper-GST.pdf
![](https://i-scholar.in/public/site/images/abstractview.png)
Abstract Views: 243
![](https://i-scholar.in/public/site/images/pdfview.png)
PDF Views: 0