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How will GST affect your investments?

4 minsFebruary 03, 2017

Goods & Service Tax (GST) bill was passed in the Rajya Sabha in the monsoon session.The passing of the bill has been one of the most powerful decisions ever taken by the Indian Government in the recent years.

GST aims to abolish the multiple tax slabs prevailing in the country today and consolidate everything into a flat rate. From the investment perspective, GST has a long way to go, before we can see the impact of the law, after it is implemented.

Implementation

It cannot be denied that the implementation of GST has indeed created some ripples in the stock market. With all transport-related taxes like Octroi duty, customs & excise duty and many more getting abolished, we are going to see a big change in the logistics industry.

GST will create a level playing field between the organised and unorganised sectors. This will be one of the major reforms of GST, when it is implemented. Some of the smart investment options during this phase would be long-term equity and mutual funds that are well-managed. Free trade and open markets will lead to more investments, which in turn will boost the economy.

Mutual Funds

The avenues to invest will witness a boost, as the market will open to many more players, allowing you access to more investment vehicles. Any investments, especially mutual funds provide more benefits why you stay invested for a long period of time.

The best way to combat market volatility is to stay invested for a long time and watch your investments correct themselves. Secure and low-risk investments like bank FDs, PPFs, etc. may not be impacted by GST.

Post-performance

According to stock market experts, Logistics companies, companies dealing with cables & wires, plywood companies, battery companies, FMCG companies, automobile dealers (especially small cars), Infrastructure, consumer durables and cement companies are all set to perform quite well in the stock market, post GST implementation. With respect to mutual funds, you don’t have to worry much, as the funds give you enough diversity to keep you covered in case of any market volatilities.

To get full benefits, you should invest in top-performing funds that are managed professionally.

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