Analysis of Impact of GST Announcements on Indian Stock Market
Dr. G. Indhumathi
Associate Professor, Department of Commerce, Mother Teresa Women’s University, Kodaikanal,
Tamilnadu
Received: 03 December 2025; Accepted: 10 December 2025; Published: 19 December 2025
ABSTRACT
The Goods and Services Tax (GST) implemented in India in July 2017 has had a significant impact on various
sectors of the economy, including the stock market. The research problems regarding the impact of GST on the
Indian stock market would include the following key aspects: Volatility in Stock Prices: How has GST affected
the volatility of stock prices in the Indian stock market and Sector-wise Impact: Which sectors, such as FMCG,
IT, or Banking, have been most affected by GST, and how have their stock prices responded. The present study
analysed the impact of GST announcement on share prices was examined over the 21-day window period, i.e.,
10 days before and 10 days after the GST Council Meeting is considered. The Mean Adjusted Model, Market
Model and Market Adjusted Model were used for estimating the expected returns, Average Abnormal Returns
(AAR) and Cumulative Average Abnormal Returns (CAAR) and T-Test for sample companies. The study results
imply that investors in different sectors have different expectations of the GST while investing in the stock
market. The automobile industry in India didn’t give significant returns in the event window. This may be
because the GST rollout positively affected consumer attitudes, as they expected a fall in prices.
Keywords: GST, Market Adjusted Model, Abnormal Return
INTRODUCTION
GST was first introduced in India in the Budget Speech presented on 28th February 2006. It laid the foundation
for a complete reform of India’s indirect tax system. Finally implemented on 1st July 2017 as the Goods and
Services Tax Act, the indirect taxation system thus went through a chain of amendments since its inception.
With this tax reform, GST replaced multiple indirect taxes that were levied on different goods and services. The
Central Board of Indirect Taxes and Customs (CBIC) is the regulatory body governing all changes and
amendments regarding this tax.
GST is levied on the final market price of goods and services manufactured internally, thereby reflecting the
maximum retail price. Customers are required to pay this tax on a purchase of goods or services as an inclusion
in their final price. Collected by the seller, it is then required to be paid to the government, thus implying the
indirect incidence.
India adopted a dual GST model, meaning that taxation is administered by both the Union and state governments.
Transactions made within a single state are levied with Central GST (CGST) by the Central Government and
State GST (SGST) by the State governments. For inter-state transactions and imported goods or services, an
Integrated GST (IGST) is levied by the Central Government. GST is a consumption-based tax/destination-based
tax, therefore, taxes are paid by the state where the goods or services are consumed not the state in which they
were produced. IGST complicates tax collection for State Governments by disabling them from collecting the
tax owed to them directly from the Central Government. Under the previous system, a state would only have to
deal with a single government in order to collect tax revenue.
REVIEW OF LITERATURE
A paper on “Impact of Implementation of GST on Indian Stock Market: A Study with reference to companies
of selected industries” done by Kushalappa. S (2020) study is conducted to find out the impact of
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