The Differential Impact of GST on Corporate Liquidity and Profitability: A Cross-Sectoral Analysis of the Automobile versus Information Technology Sectors

Pritam Paul; Ram Tanajirao Kachare

doi:10.36948/ijfmr.2026.v08i05.89102

The Differential Impact of GST on Corporate Liquidity and Profitability: A Cross-Sectoral Analysis of the Automobile versus Information Technology Sectors

Author(s)	Mr. Pritam Paul, Dr. Ram Tanajirao Kachare
Country	India
Abstract	This paper investigates whether the elimination of inter-state check-posts and the absorption of the Central Sales Tax (CST) under India's Goods and Services Tax (GST) framework yielded a statistically significant, structural improvement in inventory turnover and logistics efficiency. Using Automobile and Pharmaceutical manufacturing sectors as comparative cases, the study analyses standalone financial data from 20 listed companies (10 per sector) across a seven-year timeline (FY2015–FY2021). The study critically analyses three key variables namely, the Inventory Turnover Ratio (ITR), Days of Inventory Held (DIH) and Logistics and Freight Expenses as a percentage of Total Costs, across three different operational horizons namely, pre-GST (3 years), transition (1 year) and post-GST (3 years). Using repeated-measures ANOVA and paired-sample tests (Wilcoxon Signed-Rank and Paired t-tests), the findings indicate a sector-specific, divergent impact with no uniform structural de-bottlenecking. In the immediate transition period, the Automobile sector showed a very significant increase in operational efficiency in inventory days, which was later masked by pandemic-adjacent disruptions and macroeconomic demand shocks. Theoretically, the consolidation within the pharmaceutical sector was expected to enhance inventory efficiency; however, this anticipated benefit was significantly undermined by unique supply chain vulnerabilities, reliance on Active Pharmaceutical Ingredients (APIs), and the strategic decision to maintain buffer stockpiles during the same timeframe. Therefore, the complexities associated with these factors led to a reduction in operational effectiveness, highlighting the multifaceted challenges confronting the industry during this period. Our findings indicate that the logistics de-bottlenecking effect of GST is real but susceptible to sectoral dynamics and macroeconomic confounds.
Keywords	Central Sales Tax; Days of Inventory Held; Goods and Services Tax; Inventory Turnover Ratio; Logistics and Freight Expenses; Supply Chain De-bottlenecking.
Published In	Volume 8, Issue 5, September-October 2026
Published On	2026-10-05
DOI	https://doi.org/10.36948/ijfmr.2026.v08i05.89102

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The Differential Impact of GST on Corporate Liquidity and Profitability: A Cross-Sectoral Analysis of the Automobile versus Information Technology Sectors

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