New GST Rates: Good or Bad?
What Happens When GST Rates Go Up or Down?
What it means for businesses, industries, the stock market, and you
We all have to deal with GST, or Goods and Services Tax, when we shop online, eat out, buy a house, or run a business. The government changes these GST rates from time to time. They go up and down at times. But what does this really mean for regular people, businesses, and investors?
Let's make it simple.
Why do GST rates go up and down?
The government changes GST rates to:
Help some industries
Make things cheaper
Get more money by raising taxes
Encourage or discourage people to buy certain things, like EVs instead of cigarettes.
The Good Stuff When GST Rates Go Down
1. Everyone can buy things for less
If the GST goes down on things like clothes, cell phones, or food from restaurants, we pay less. That's extra money for you.
2. Business Gets a Boost
Less tax means lower costs, which means more sales. People buy more when prices go down. That's good news for businesses, especially in fields like:
Cars (like electric vehicles)
Real estate and hospitality
Things for people to buy
3. The Stock Market Loves It
Companies that sell a product often see their stock prices go up when the government lowers the GST on that product. Investors like it when sales and profits go up.
❌ The Bad Things That Happen When GST Rates Go Up
1. Things cost a lot
When GST goes up, it hurts us. Things like insurance, online gaming, or expensive items can cost more.
2. Business Could Get Hurt
More taxes mean higher prices, which means fewer customers. Some companies lose money or have to lay off workers.
For instance, when the GST on online gaming went from 18% to 28%, companies like Dream11 and MPL started to lose money and value.
3. The stock market can go down.
If the GST on a good or service goes up, the stock prices of companies that sell it may go down. Investors get worried when profits go down.
Effects on Each Sector (Examples)
Area
Change in GST
What Went Wrong
Electric cars
12% to 5%
Companies made more money as sales went up.
Playing games online
18% to 28%
Startups had a hard time, and investors pulled out.
Travel and hotels
28% to 18%
More reservations, the industry is getting better
Real Estate and Cement
No cut in GST
Costs stayed high, which was bad news for builders.
How It Affects the Market
The good news (GST cut) makes stocks go up, especially in the sector that was affected.
Bad news (GST hike) means stocks go down.
Investors move their money around depending on which industries are doing well or poorly.
What It Means for You and Me
If the GST rate goes down
If GST Rises
We pay less for things.
Things cost more
Companies get bigger
Some businesses may get smaller.
There may be more jobs.
There could be layoffs.
Last Thoughts
Depending on the situation, changing GST rates can be good or bad.
What part of the economy it affects
If rates go up or down
How people and businesses respond
The government uses it to keep the economy in check, but it always has an effect on real people and businesses.
So the next time you hear about a change to the GST, pay attention. It could change the things you buy, how much you pay, your investments, or even your job.
