GST AND STOCK MARKETS

By: Komal Garg

Goods and Services Tax (GST) is an indirect tax throughout India to replace taxes levied by the central and state governments. It will replace all the various taxes and bring them under one umbrella to make compliance easier. It is one of the most important tax reforms of all the time in the history of Indian taxation system. GST is levied on all transactions such as sale, transfer, purchase, barter, lease, or import of goods and/or services. India will adopt a dual GST model, meaning that taxation is administered by both the Union and State Governments. GST is a consumption based tax, therefore, taxes are paid to the state in which the goods or services are consumed not to the state in which they were produced. Different types of GST levied are:

IMPACT OF GST ON DIFFERENT SECTORS

  1. Fast Moving Consumer Goods (FMCG)

Market experts believe GST in the FMCG sector is positive for companies like Nestle, Marico, Dabur India and Colgate. Overall, the food side of the FMCG business is likely to benefit from the GST. One should also keep an eye of stock like Heritage Foods.

  1. Consumer Durables and Capital Goods

Voltas, Havells and CG Consumer may benefit fundamentally as GST will bring more companies under the organized ambit and reduce the unfair competition from unorganized players.

  1. Automobiles

Sectors that could see a negative impact include passenger vehicles especially in light of the cess announced for petrol and diesel vehicles. Post GST, small to mid-segment cars are expected to be impacted which in turn could translate into a gain for the two-wheeler segment.

  1. Cement, coal and steel

Steel and power companies that depend heavily on coal will also benefit from the lower GST on coal. JSW and Tata Steel may be the key beneficiaries .