A STUDY ON THE IMPACT OF GOODS AND SERVICE TAX ON

MICRO SMALL AND MEDIUM ENTERPRISES

A PROJECT REPORT

SUBMITTED TO

KANNUR UNIVERSITY

IN PARTIAL FULFILLMENT FOR THE AWARD OF THE DEGREE

BACHELOR OF COMMERCE

SUBMITTED BY

AKHIL.N SP21BR0024

Under the valuable guidance of

MR.NIDHIN MATHEW

Assistant Professor

DEPARTMENT OF COMMERCE
ST.PIUS X COLLEGE, RAJAPURAM
KASARAGOD, KERALA

2021-2024
 DECLARATION

I AKHIL.N , hereby declare that the project work entitled “A

STUDY ON THE IMPACT OF GOODS AND SERVICE TAX ON
MICRO SMALL AND MEDIUM ENTERPRISES” was prepared by
us and submitted to Kannur University in partial fulfilment of
requirements for the award of Bachelor of Commerce, is a record of
original work done by me under the supervision of Mr. Nidhin Mathew,
Assistant Professor of the Department of Commerce, St. Pius X College
Rajapuram.
I also declare that this project work us not been submitted by as fully or
partialy for the award of any degree, diploma, title or recognition before.

Place : Rajapuram AKHIL.N

Date :
DEPARTMENT OF COMMERCE
ST.PIUS X COLLEGE, RAJAPURAM
(Government Aided College Affiliated to Kannur University)
(Re-accredited by NAAC with „A‟ grade)
KASARGOD, KERALA-671532

Date:…….……………

CERTIFICATE

This is to certify that the project report entitled “A STUDY ON

THE IMPACT OF GOODS AND SERVICE TAX ON MICRO
SMALL AND MEDIUM ENTERPRISES” is a record of original work
done by AKHIL.N (SP21BR0024) for the award of degree of B.COM
with Computer Applications, during the period of their study 2021-2024
under my supervision and guidance.

Place: Mr. Nidhin Mathew

Date: (Guide and Supervisor)

COUNTER SIGNED

Mr. Nikhil Mohan

(Head of the Department)
 ACKNOWLEDGEMENT

At the completion of our project, I am deeply grateful to people

who extended their helping hands. First of all, we raise our heart and
mind in thank to the God who is always leading and guiding us in all our
endeavors.
I express our sincere thanks to our Principal Dr. DEVASIA M.D,
for giving us an opportunity to carry out the project. We are thankful to
Mr. NIKHIL MOHAN, Head of the Department, for his support and
guidance throughout the project. We express our gratitude to Mr. NIDHIN
MATHEW, Assistant Professor, Department of Commerce, who provided
the opportunity to do our project under his guidance and we express our
sincere gratitude for his valuable guidance, encouragement and
suggestions throughout the period of our study. We affirm our renewed
thanks to everyone who have helped us one way or in other to complete
this project. We deeply acknowledge every service with gratitude.

Thanks to one and all…

AKHIL.N
 CONTENTS

CHAPTER CONTENTS PAGE

NO
1 INTRODUCTION NO
01-06

2 REVIEW OF LITERATURE 07-14

3 THEORETICAL FRAMEWORK 15-23

4 DATA ANALYSIS & INTERPRETATION 24-42

5 FINDINGS,SUGGESTIONS& CONCLUSION 43-47

6 ANNEXURE 48

7 BIBLIOGRAPHY 49-50

8 QUESTIONNAIRE 51-52
 LIST OF TABLES

TABLE PAGE
TITLE
NO NO
1 TABLE SHOWING TYPES OF ORGANAISATION 24
TABLE SHOWING THE REGISTERATION STATUS
2 25
UNDER GST
TABLE SHOWING THE DIFFICULTY LEVEL OF
3 26
ORGANAISATION UNDER GST
TABLE SHOWING THE DIFFICULTY IN KEEPING UP
4 27
WITH FREQUENT CHANGES IN GST RULES
TABLE SHOWING THE ISSUE WITH FILING TIMELY
5 28
GST RETURNS
TABLE SHOWING THE DATA RELATED TO THE
6 PENALTIES FACED BY THE ORGANAISATIONS DUE 29
TO NON COMPLIANCE OF GST REGULATIONS
TABLE SHOWING THE IMPACT OF GST ON COST
7 30
STRUCTURE
TABLE SHOWING THE IMPACT OF GST ON
8 31
OVERALL COST OF RAW MATERIALS
TABLE SHOWING THE IMPACT OF GST ON
9 32
TRANSPORTATION COST
TABLE SHOWING THE IMPACT OF GST ON PRICING
10 33
STRATEGY ADJUSTMENTS
TABLE SHOWING THE IMPACT OF TECHNOLOGY
11 ON IDENTIFYING AND RECTIFYING ERRORS IN GST 34
FILINGS
TABLE SHOWING THE IMPACT OF TECHNOLOGY
12 ON ACCURECY OF GST RELATED DATA 35
MANAGEMENT
TABLE SHOWING THE IMPROVEMNET OF
13 36
TRANSPARENCY AND TREACEABILITY OF GST
 TRANSACTION DUE TO TECHNOLOGY
INEGERATION
TABLE SHOWING THE COST SAVINGS RESULTING
14 FROM TECHNOLOGY INTEGERATION IN 37
MANAGING GST ACTIVITES
TABLE SHOWING THE IMPACT OF GST ON MARKET
15 38
EXPANSION
TABLE SHOWING THE IMPACT OF GST ON
16 39
ORGANAISATION BENFITS
TABLE SHOWING THE IMPROVED
COMPETITIVENESS IN MARKET DUE TO
17 40
STANDARDIZED TAXATION PROCEDURES UNDER
GST
TABLE SHOWING THE CHANGES IN CONSUMER
18 BEHAVIOUUR AND MARKET DEMAND PATTERNS 41
AFTER GST IMPLIMENTATION
 LIST OF FIGURES

TABLE PAGE
TITLE
NO NO

1 FIGURE SHOWING TYPES OF ORGANAISATION 24

FIGURE SHOWING THE REGISTERATION STATUS

2 25
UNDER GST

FIGURE SHOWING THE DIFFICULTY LEVEL OF

3 26
ORGANAISATION UNDER GST

FIGURE SHOWING THE DIFFICULTY IN KEEPING UP

4 27
WITH FREQUENT CHANGES IN GST RULES

FIGURE SHOWING THE ISSUE WITH FILING TIMELY

5 28
GST RETURNS
FIGURE SHOWING THE DATA RELATED TO THE
6 PENALTIES FACED BY THE ORGANAISATIONS DUE 29
TO NON COMPLIANCE OF GST REGULATIONS
FIGURE SHOWING THE IMPACT OF GST ON COST
7 30
STRUCTURE
FIGURE SHOWING THE IMPACT OF GST ON
8 31
OVERALL COST OF RAW MATERIALS
FIGURE SHOWING THE IMPACT OF GST ON
9 32
TRANSPORTATION COST
FIGURE SHOWING THE IMPACT OF GST ON PRICING
10 33
STRATEGY ADJUSTMENTS
FIGURE SHOWING THE IMPACT OF TECHNOLOGY
11 ON IDENTIFYING AND RECTIFYING ERRORS IN GST 34
FILINGS
FIGURE SHOWING THE IMPACT OF TECHNOLOGY
12 ON ACCURECY OF GST RELATED DATA 35
MANAGEMENT
 FIGURE SHOWING THE IMPROVEMNET OF
TRANSPARENCY AND TREACEABILITY OF GST
13 36
TRANSACTION DUE TO TECHNOLOGY
INTEGERATION
FIGURE SHOWING THE COST SAVINGS RESULTING
14 FROM TECHNOLOGY INTEGERATION IN MANAGING 37
GST ACTIVITES
FIGURE SHOWING THE IMPACT OF GST ON MARKET
15 38
EXPANSION
FIGURE SHOWING THE IMPACT OF GST ON
16 39
ORGANAISATION BENFITS
FIGURE SHOWING THE IMPROVED
COMPETITIVENESS IN MARKET DUE TO
17 40
STANDARDIZED TAXATION PROCEDURES UNDER
GST
FIGURE SHOWING THE CHANGES IN CONSUMER
18 BEHAVIOUR AND MARKET DEMAND PATTERNS 41
AFTER GST IMPLIMENTATION
 CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION

GST brought about a comprehensive change by amalgamating various taxes

like Central Excise Duty, Service Tax, Value Added Tax (VAT), and others into a
single tax regime. The new system simplified compliance, reduced tax evasion, and
eliminated tax on tax.
This tax reform aimed to boost economic efficiency, improve ease of doing
business, and create a common national market. While it faced initial challenges in
terms of implementation and adaptation, GST has gradually evolved, with on-going
discussions on refining the tax structure further to address concerns raised by various
stakeholders.Overall; GST has played a pivotal role in reshaping India's indirect tax
landscape, fostering a more transparent and unified taxation system.
The implementation of the Goods and Services Tax (GST) in India has marked
a significant shift in the taxation landscape, particularly impacting Micro, Small, and
Medium Enterprises (MSMEs) across various sectors. This study aims to delve into
the multifaceted effects of GST on MSMEs, addressing key objectives to
comprehensively understand its implications.
Micro, Small, and Medium Enterprises (MSMEs) in India play a crucial role
in the country‟s economic growth. The government has implemented various schemes
and initiatives to support MSMEs, such as easier credit access and favourable
policies.
Micro, Small, and Medium Enterprises (MSMEs) are categorized based on their
investment in plant and machinery or equipment.
1. Micro Enterprises:
 Manufacturing: Investment in plant and machinery does not exceed INR 1
crore.
 Services: Investment in equipment does not exceed INR 50 lakhs.
2. Small Enterprises:
 Manufacturing: Investment in plant and machinery is more than INR 1 crore
but does not exceed INR 10 crores.
 Services: Investment in equipment is more than INR 50 lakhs but does not
exceed INR 5 crores.

1
3. Medium Enterprises:
 Manufacturing: Investment in plant and machinery is more than INR 10 crores
but does not exceed INR 50 crores.
 Services: Investment in equipment is more than INR 5 crores but does not
exceed INR 20 crores.

Through this comprehensive analysis, we endeavour to provide insights that

not only illuminate the challenges and opportunities for MSMEs in the GST era but
also inform policymakers and stakeholders on strategies to foster a conducive
environment for the growth and sustainability of small businesses amidst evolving
taxation paradigms.

1.2SIGNIFICANCE OF THE STUDY

Goods and Services Tax (GST) is a unified indirect tax system in India that
replaced multiple taxes. MSMEs are also subject to GST, which is applicable on the
supply of goods and services. They need to register under GST if their aggregate
turnover exceeds the prescribed limit.
Study‟s significance lies in its potential to inform policy reforms, support
MSMEs‟ financial management and business development efforts, promote
technology adoption, enhance financial sustainability, and streamline tax compliance
procedures, thereby contributing to the growth and resilience of MSMEs in the Goods
and Services Tax era.

1.3 STATEMENT OF THE PROBLEM

The study aims to investigate the challenges faced by Micro, Small, and
Medium Enterprises (MSMEs) in adhering to Goods and Services Tax (GST)
regulations, evaluate the direct and indirect impacts of GST on MSMEs‟ cost
structures, assess the influence of technology integration on GST-related processes‟
efficiency and effectiveness, identify potential opportunities arising from GST

2
implementation, analyse the profitability, liquidity, and overall financial health of
MSMEs in the GST era, and evaluate the effects of GST on tax compliance
procedures for MSMEs

1.4 OBJECTIVES OF THE STUDY

1. To investigate the challenges encountered by MSMEs in complying with GST
regulations.
2. To Evaluate the direct and indirect impact of GST on the cost structure of MSMEs.
3. To assess how technology integration has influenced the efficiency and
effectiveness of GST-related processes.
4. To identify potential opportunities that has emerged for MSMEs as a result of GST
implementation.

1.5 SCOPE OF THE STUDY

GST is the tax reform that is extended to the whole of India. The present study
is confined to the state of Kerala, with special reference to Kasaragod district. All
types of manufacturing and service organisation including retailers and wholesalers
are considered here for the purpose of study.

1.6 RESEARCH METHODOLOGY

The study focus on MSME units operating in the state of Kerala. Total 100 units
operating in the state of Kerala have been selected for the purpose of the study.
Structure questionnaire was prepared to translate the objective of the study into a set
of questions in a plain and simple language. Only closed ended questions were
included in the questionnaire. Primary data have been collected using random
sampling method. Survey method based on the questionnaire was used to attain the
objective of the study.
MSMEs play a crucial role in the Indian economy, contributing to employment
generation, industrial output, and overall economic growth. Therefore, it is essential to
interpret how GST influences these enterprises in order to inform policy-making,
business strategies, and sustainable development efforts. This research aims to explore
various aspects of the GST-MSME nexus from a multidimensional perspective. It

3
seeks to answer important questions such as how GST impacts the pricing strategies,
production decisions, and market behaviour of MSMEs. Additionally, it investigates
the transactional costs, compliance burdens, and administrative challenges faced by
MSMEs in adapting to the new tax regime. Furthermore, the study examines the
policy interventions and support mechanisms required to facilitate MSMEs' transition
to GST and enhance their resilience in the changing business landscape. This study
not only contributes to academic understanding but also provides practical insights for
policymakers, business leaders, and stakeholders who are navigating the complexities
of GST implementation in the MSME sector. Through rigorous analysis and empirical
investigation, we aim to offer nuanced perspectives that inform policy formulation,
foster entrepreneurship, and promote inclusive economic development in the era of
GST.
Theoretical framework explores how MSMEs struggle with GST regulations,
considering factors like regulation complexity, guideline clarity, and support
availability. Insights from institutional economics and compliance behaviour shed
light on how MSMEs manage regulatory obligations and the consequences of non-
compliance on their business.
When assessing the impact of GST on MSMEs' cost structure, the framework
considers taxation incidence, cost accounting, and supply chain management theories.
It examines how GST influences input costs, pricing strategies, and profitability,
taking into account short-term adjustments and long-term strategic responses by
MSMEs.
Additionally, the framework considers theories on technology adoption,
organizational change, and information systems when evaluating the impact of
technology integration on GST processes. It explores how MSMEs utilize tools like
accounting software, ERP systems, and digital payment platforms to improve GST
compliance, increase operational efficiency, and reduce compliance risks.

The framework considers theories on market structure, innovation, and

entrepreneurship in relation to GST. It examines how GST reforms can benefit
MSMEs by creating a unified market, simplifying tax administration, and fostering
growth, competitiveness, and innovation.

4
RESEARCH DESIGN

The research design for the study is exploratory, aiming to investigate the
impact of Goods and Service Tax on the Micro Small and Medium Enterprises

SAMPLING DESIGN

The sampling frame consists of manufacturing, service, retailers and

wholesalers in KASARAGOD district. A Sample size will be determined based on the
feasibility and practicality of accessing participants, the sample size will comprise100
manufacturing, service sectors wholesalers and retailers selected based on their
availability and willingness to participate in the study

SOURCES OF DATA COLLECTION

The present study utilised data from primary as well as secondary sources

PRIMARY DATA:
For the primary data collection, a structured questionnaire will be used to
gather information from the Micro Small and Medium Enterprises in Kasaragod
district. Google Forms will serves as the platform controlling the questionnaire. The
questionnaire will be designed to gather information on the impact of The Goods and
Service Tax on the Micro Small and Medium Enterprises.

SECONDARY DATA:
Secondary data will be gathered from various sources such as:
 Government web sites : such as Income Tax department publications and
reports
 Academic journals and research papers : Studies and journals related to the
impact of the Goods and Service Tax on the Micro Small and Medium
Enterprises
 Books and reports : Publications discussing tax laws and entrepreneurial
development

5
TOOLS USED FOR ANALYSIS

Statistical tools, percentage analysis were used for analysing the data, and
graphs and diagrams were used for presenting data.

1.8 LIMITATIONS OF THE STUDY

 The scope of study is limited to the state Kerala, special preference to

Kasaragod district
 The study was conducted within a short period of time
 The study's findings may be limited by factors such as self-reporting bias and
the representativeness of the sample.

6
 CHAPTER 2

REVIEW OF LITERATURE

7
 S.P Mathiraj Subramanian and Thivya Sundar (2019) have published a
paper named “Impact of GST on MSME's” in International Journal of Recent
Technology and Engineering. In the study they analyse the impact of GST on
MSME's in Sivagangi district in Tamilnadu. The study consist both primary and
secondary data primary data collected through structure in the review and scheduled
from selected micro and small scale industry on GST in shivagagi district Tamilnadu.
Secondary data have been collected from the published and unpublished reports and
books action plans of directors of industries and commerce Chennai, selected 826
enterprises as sample size through cluster random sampling technique the
questionnaire was framed for the study pertain to MSME's view point on GST
implementation. Frequency distribution analysis, descriptive statistics like mean,
standard deviation, reliability analysis, independent T test, one way ANOVA,
correlation and regression are the main statistical techniques used in the study. The
study fine that the challenges faced by MSME's in GST preparedness and the need for
refining the GST network feedback from small enterprises suggested balanced impact
indicating for improvement .

Manjeet S Dhillion and Dr.Rit Gautham (2022) published a paper named “A

Critical Assessment of the Impact of GST in MSMEs in the State of Punjab” in Gyan
Management Journals. The objective of the study is to study the challenges and
advantages that have accrued to MSME sector of Punjab on account of GST and to
suggest measure to make GST more MSME friendly contact to government agenda of
ease of doing business. The study focused on MSME units operating in this state of
Punjab .Total 150 MSME units in the region of Punjab have been selected for the
purpose of study. Structured questionnaire was prepared to translate the objective of
the study into a set of questions in a simple and plain language. Open ended questions
were also including in the question. The primary data have been collected using a
stratified sampling process to make the sample more representative 50 micro,50 small
and 50 medium enterprises where chosen from a total selected sample of 150 units
related to MSME units. The secondary data required for the study collected from
various research papers, articles, and thesis and government publications. MSME
Units in Punjab find it much easier and advantageous to outsource the GST related to

8
the professional rather than managing it in house all the complaints under GST being
done online is viewed as a huge relief even through MSME are encountering
challenges that day never had to face before but with the right business atmosphere,
required support from Government and there is no alternative but to move forward,
one can expect that with the some challenges to stay for some more times MSMEs is
will surely find in enumerous opportunities in the present GST regime and in time to
come MSMEs will emerge as a more robust and competitive form of business in
Indian business environment.

Scholar Raju Naru (2018) Published a paper named “Impact of GST on SMEs in
India” in international journal of creative research thoughts. The study based on the
objectives of to highlight regarding how GST will impact business transactions, you
identify which SMEs are eligible for GST and to discuss the impact of GST on SMEs.
The study completely based on secondary data and the data have been connected from
various sources like as books, journals and websites etc. as the introduction of GST is
infant stage of proper data connection is not possible through primary data. So the
researcher chosen secondary data for his study and statistical instruments are used.
The research find out the impact of GST on SMEs are ease of starting a business,
ability to compete with multinationals and multi-state enterprises, reduce tax burden
and better logistics. No doubt that GST is aimed to increase the taxpayer‟s base,
majority SMEs into its scope and will put a burden of companies and associated costs
to them. But in the long run GST bill turn this SMEs more competitive with level
playing field between large enterprises and them. Furthermore, these Indian SMEs
would be able to compete with foreign competition coming from cheap cost centres
such as China, Philippines and Bangladesh.

Vidit Mohan and Salman Ali (2018) conducted a study named “analyse the impact of
GST on MSMEs” gathering qualitative and quantitative data from chosen MSME
owners. According to the findings of the research, there is room for GST to be
implemented effectively. In the Chittoor area of Andhra Pradesh, India, S. Goutami
performed research on GST awareness among micro, small, and medium businesses.
As she pointed out, there is a positive association between firm size and experience,
as well as perceived GST worries and challenges, in the chosen district. According to

9
the study, 70% of respondents are aware of the GST system; business operators with
annual revenues of more than 1.5 crores are more likely to be aware of GST.

Jojo K Joseph and Ranu Jacob(2019) investigated the association between several
parameters and MSMEs' tax compliance behaviour under the GST regime. They
provided a conceptual model that included information on tax payer awareness,
knowledge, satisfaction, demographic characteristics, and tax compliance service
quality. How these determinants affect MSMEs' tax compliance.

Dr. Harish.N (2019) in their research paper on, "Impact of GST on Micro, Small and
Medium Enterprises" has reviewed that, Small and Medium Enterprises (SMEs) have
been considered as the primary growth driver of the Indian economy for decades. It is
further evident from the fact that today we have around 3 million SMEs in India
contributing almost 50% of the industrial output and 42% of India's total export. For a
developing country like India and its demographic diversity, SMEs have emerged as
the leading employment-generating sector and has provided balanced development
across sectors.

Shivani (2019) Conducted a study on the topic "Impact of GST on Micro, Small and
Medium Enterprises" pointed out that the Goods and Services Tax (GST) is
apparently a long term scheme. It would lead to rise in output, employment
opportunities and economic development and progress of the nation. However, in the
initial phase of its implementation it is likely to increase the administrative difficulties
and the compliance cost. MSME's would be able to derive the advantages of GST, if
they are able to revitalize their business processes and systems in line with
compliances as required under this law, as it would not be operationally feasible for an
MSME's to operate out of credit chain. With technology &robust IT infrastructure,
compliance can be made simple. MSMEs will need to have the courage to comply
with the tax laws & ultimately contribute towards the growth of the nation. The shift
from the traditional tax system to GST is considered as a 'behavioural change' more
than a tax changes because its successful implementation depends to a great extent on
how quickly businesses adapt to the digital format of taxation.

10
Dr P Mari Selvam (2023) were conducted a study named "Impact of GST on
MSME's". The objective of the study is to measure the benefit of GST to MSME's and
identify the impact and cause of goods and service tax on MSME. The study is in
descriptive nature and data‟s are collected from secondary sources like journals,
magazine, newspaper, websites and reports. The study says that implementation of
GST is ultimately beneficial of MSME's but also there are a number of drawbacks too.
And researcher is discussing a number of benefits like starting business become
easier; improve MSME market expansion, lower logistical overhead, Aids dealing in
sales and services, unified market, purchase of capital goods. Also discussing a
number of drawbacks like, the burden of lower threshold, selective tax levying, and
burden of higher tax rate for service providers. Then the researcher is discussing about
positive-negative impact and causes of GST on the areas like registration, payment,
refund and return. The study finds that GST Aimed to increase the taxpayer base,
major majority MSME is into its scope. But they have to beer burden of its associated
costs. But for long run GST will benefited to MSME's. Mainly researcher point out
major limitations as no tax difference for luxury items and services. The study
concludes with GST will bring mainly positives compared to the current system, and
the change of temporary delay is minimum for MSME's.

Mrugakshi Rajhan(2018) is completed research on"Impact of government financial

Initiatives on the development of micro small and medium scale enterprises in Pune
district"The government has been introducing many schemes to promote the MSME's
in India. These schemes help the MSME's to sustain and grow. The financial schemes
introduced after liberalization have proved to be very beneficial. The impact of
financial schemes on the sustenance and growth of the MSME sector is the topic for
the research work. The place of research considered is Pune District, which is in the
state of Maharashtra which is one of the largest states in India on the basis of
population and also considering the geographic area. It is also one of the most
industrialized states. It is also the pioneer state for starting the small scale industries
for the country. Pune District is one of the important industrial centres of Maharashtra.
It has a strong MSME industrial base. This industrial area consists of automobile
industry,

11
Rahul Nandi published a journal named “The impact of GST on SME's” in
International generals of management, IT & engineering. To exam in the opportunities
offered by GST on MSME's, to investigate problems faced by MSME's in
implementation of GST, exam in the impact of GST on MSME's registered and
composition scheme are the main objectives of the study. Study is in analytical in
nature. The study is based on secondary data published in the form of official
publications by different government agencies, journals, magazines, newspaper etc.
Rahul Nandhi come with the conclusion that GST is not a complex system but there
still exist a lot of confusions, queries, and lack of clarifications for different fact of its
implementation. GST has offered a great opportunity for the MSME‟s, which are
considered the growth engine of the nation. MSME's are facing a lot of challenges in
coping the new tax regions of the country. It is expected that the problems arising
from lack of knowledge.

Kritika Somani (2018)Publshed an article on “Impact of GST on Micro Small &

Medium Enterprises" pointed out that the India's paradigm shift to the Goods and
Services tax regime in July will increase the compliance costs and snare a majority of
them into the Indirect tax net for the first time.GST is a proposed legislation in India
which proposes a unified nation-wide value added tax to be implemented in India. It is
introduced by the 101st amendment of Indian constitution by Modi government on 1st
July 2017. MSME is Micro, Small and Medium Enterprises. MSME sector is the
backbone of Indian economy as it account for 25% of employment, 45% of industrial
output and 40% of exports of the country and it also contribute significantly to gross
value added of the country.MSME is the second largest sector for employment
generation, after agriculture, in India. MSME's are the primary growth drivers of the
economy. They are the most various agencies which play a crucial function in the
boom and development in an Indian economy.

Rahul Mohan Karhale (2019) published a journal named “A Study of Impact of

GST on Micro, Small and Medium Enterprises Business Sector in Marathwada
Region” in Research gate. The objectives of the paper is to study the positive and
negative impact of GST on MSME's business sector in Marathwada Region and to
highlight the problem related of GST on MSME's. The researcher was set up for

12
hypothesis and the data needed for the study is collected in both the primary and
secondary sources. The researcher identifies specific challenges faced by MSME in
Marathwada in understanding and complying with GST regulations. Insights into the
level of technology adoption among MSME in Marathwada for GST compliance
including the extent to which business have embraced digital platform and accounting
software. Investigation of the border impact of GST on the local economy in
Marathwada including employment trend, business growth and overall economic
conditions.

Venkatajalapathy.R (2016) conducted a study on the topic “Implications of MSME

Policy on the Industrial Development of Pondicherry Region”. The MSME sector is
the second largest employer after agriculture, and policy makers see it as an
opportunity to scale up business growth, making it a key partner in fostering broader
growth. The All India 4th Census reported that 45% of MSMEs are in lagging regions.
The researcher examines the overall growth and trends of MSME, and the evolution,
and development of MSME Policies. The study also focuses on Infrastructural,
Financial, technology, and marketing policy, level of awareness, and problem solving
capacity of MSME in Pondicherry, India. The primary data is collected from 400
respondents of the Union Territory of Pondicherry with the help of standard
questionnaires using the Resins Likert Scale method. The findings of the study reveal
that consistent with growth and trends of the Pondicherry Region from all of India are
a benchmark, but MSMEs at Pondicherry are very poor. Awareness and understanding
of the Credit Guarantee Fund Scheme (CGFS) in the financial system is very low.
Significantly Technology, Marketing, and Infrastructural policies awareness are
moderate. Finally, governments should take appropriate measures to sustain existing
industries and strive to raise entrepreneurial awareness in finance, infrastructure,
technology and marketing. Government can provide competence-based education at
10th level, upper secondary and postgraduate level to improve her MSME in rural and
urban areas.

Shamsuddin A (2016) –Conducted a study named “The Impacts OF GOODS AND

SERVICES TAX (GST) ON THE SMALL MEDIUM ENTERPRISE (SMEs) IN
JOHOR BAHRU”, this study utilised survey method in gathering the data and 150

13
respondents in Johor Bahru, Malaysia. The findings indicated that level of knowledge
and subjective norm have significant relationships with perceived impact of SMEs
towards GST implementation. Findings from this study would contribute to a more
comprehensive perceptive on GST and their impacts on businesses, in particular
SMEs. The results of the study indicates that a better understanding on GST, the
higher educational level of employees and the higher level of management support the
implementation of GST in SMEs in Johor Bahru.

Chouhan V,Shakdwipee.P & Khan S. (2017) - in their paper named “Measuring

Awareness about Implementation of GST: A Survey of Small Business Owners of
Rajasthan” had the objectives to find the degree of awareness amongst Rajasthan‟s
small business owners. For this study samples were taken from 148 small business
and convenience sampling method was used. In order to examine the data, the study
used statistical approaches such as descriptive analysis, ANOVA, and multiple
regression analysis. The analyzing of data discovered that business owners'
knowledge was low to moderate. Except that one of the key challenges was that the
owners need training in the use of computers and software, since GST encourages the
use of computers for a variety of reasons that earlier systems could not supply. The
majority of respondents projected that consumers would refuse to pay GST.
Furthermore, many findings regression revealed that GST may boost the states as well
as the country's revenue growth. GST has the potential to introduce consistency to the
taxing system, hence simplifying the overall structure. However, due to a few
disadvantages, individuals are still hesitant to use it

(L.R, 2017)Aimed that there will be the GST impact on the working capital
requirements, increase interest cost, and influence pricing policy for Small and
Medium Enterprises. The purpose of this study is to understand the concept and
implications and explore opportunities for MSMEs to implement GST. This study has
discussed the positive and negative impacts of GST, strengths and weaknesses,
challenges, and industry-related benefits of GST. The researchers further found that
the majority of small and medium-sized businesses now avoid paying taxes and meet
compliance requirements when they reach thresholds restricted by tax laws intended
to overthrow the company.

14
 CHAPTER 3

THEORETICAL FRAMWORK

15
GOODS AND SERVICE TAX (GST)

The Goods and Services Tax (GST) is a comprehensive indirect tax system
that aims to consolidate various existing indirect taxes such as excise duty, service tax,
value-added tax (VAT), and others. Its main objective is to establish a unified taxation
structure, facilitating business operations and reducing the burden of multiple taxes.
Under the GST system, both goods and services are subject to taxation at each stage
of production and distribution. This ensures that the entire supply chain is taxed, and
it allows for the smooth flow of input tax credits throughout the supply chain,
preventing double taxation.
GST is divided into Central GST (CGST) and State GST (SGST), where both the
central government and state governments impose taxes on the same transaction.
Additionally, there is an Integrated GST (IGST) that applies to inter-state transactions.
The rates of GST can vary depending on the type of goods or services, with certain
items being exempted or taxed at a lower rate.
The implementation of GST is considered a significant step towards simplifying the
tax system, enhancing compliance, and fostering economic growth by establishing a
more transparent and efficient tax regime.
The concept of a nationwide GST in India was initially proposed by the Kelkar
Task Force on Indirect taxes in 2000. The main goal was to simplify the existing
complicated and fragmented tax system by implementing a unified system that would
make it easier for people to comply with tax regulations, reduce the issue of tax
cascading, and promote economic integration. The Empowered Committee of State
Finance Ministers then developed a plan and roadmap, releasing the First Discussion
Paper in 2009. In 2011, the Constitution Amendment Bill was introduced, but it faced
challenges related to compensating the states and other concerns.
After years of discussions and negotiations between the Central and State
Governments, the Constitution (122nd Amendment) Bill, 2014, was presented in
Parliament. The purpose of this bill was to amend the Constitution in order to enable
the implementation of GST. In May 2015, the Lok Sabha passed the Constitution
Amendment Bill. After some amendments, the bill was finally passed by the Rajya
Sabha and then again by the Lok Sabha in August 2016. It was later ratified by the

16
required number of states and received the President's approval on September 8, 2016,
becoming the 101st Constitution Amendment Act, 2016. The GST Council was
established on September 15, 2016, to assist in the decision-making process regarding
various aspects of GST, such as tax rates, exemptions, and administrative procedures.
The GST Council Secretariat was also set up to support the GST Council.
The GST Council consists of the Union Finance Minister and representatives from all
states and union territories. It played a crucial role in shaping the GST framework in
India. On July 1, 2017, the GST laws were implemented, replacing the complex
system of central and state taxes. Under the Indian GST, goods and services are
classified into different tax slabs, including 5%, 12%, 18%, and 28%. Some essential
commodities are exempt from GST, while gold and job work for diamonds are subject
to a lower tax rate. Additionally, a compensation cess is levied on demerit goods and
certain other items.

COMPONENTS OF GOODS AND SERVICE TAX

1. INTEGRATED GOODS AND SERVICES TAX or IGST

 The Integrated Goods and Services Tax or IGST is a tax under the GST
regime that is applied on the interstate (between 2 states) supply of goods
and/or services as well as on imports and exports.
 The IGST is governed by the IGST Act. Under IGST, the body responsible
for collecting the taxes is the Central Government. After the collection of
taxes, it is further divided among the respective states by the Central
Government.

2. STATE GOODS AND SERVICES TAX or SGST

 The State Goods and Services Tax or SGST is a tax under the GST
regim that is applicable on intrastate (within the same state) transactions.
In the case of an intrastate supply of goods and/or services, both State GST
and Central GST are levied.
 However, the State GST or SGST is levied by the state on the goods and/or
services that are purchased or sold within the state. It is governed by the

17
 SGST Act. The revenue earned through SGST is solely claimed by the
respective state government.

3. CENTRAL GOODS AND SERVICES TAX or CGST

 Just like State GST, the Central Goods and Services Tax of CGST is a
tax under the GST regime that is applicable on intrastate (within the
same state) transactions. The CGST is governed by the CGST Act. The
revenue earned from CGST is collected by the Central Government.

4. UNION TERRITORY GOODS AND SERVICES TAX or UTGST

 The Union Territory Goods and Services Tax or UTGST is the
counterpart of State Goods and Services Tax (SGST) which is levied
on the supply of goods and/or services in the Union Territories (UTs)
of India.
 The UTGST is applicable on the supply of goods and/or services in
Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra, and
Nagar Haveli, and Lakshadweep. The UTGST is governed by the
UTGST Act.

RATES OF GOODS AND SERVICE TAX

Goods and Services Tax has been introduced to unify the tax system merging
all other indirect taxes. Unification of tax system does not mean unification of tax
rates. In fact, there are many rates at which GST is levied on different supplies of
goods and services. In a vast country like India, people have wide disparity in income
levels. Hence it is impossible to charge the same rate of tax on all types of supplies.
There are consumers in the country having annual income in trillions. At the same
time, lakhs of families belong to BPL category that are extremely poor. Therefore, tax
rates are determined on the basis of type of supplies, future developmental plans and
revenue requirements of the Government, global competition, etc.
The details of the GST rate structure presently prevailing in the country are as
follows.

18
  Exempted supplies: A large number of items have been exempted from the
purview of GST. Most of the farm products, live animals, live chicken, live
fish, eggs, honey, puja articles, hearing aids, slate pencils, etc., belong to the
category of exempted goods
 Taxable at the rate of 0.25%: Diamonds (non-industrial unworked), precious
stones (other than diamonds) and semi-precious stones (unworked), synthetic
or reconstructed precious or semi-precious stones (unworked) are the items on
which 0.25% is applicable.
 Taxable at the rate of 3% : Base metals, gold, silver, articles of jewellery,
imitation jewellery, coin, waste and scrap of precious metals, etc., are taxable
at the rate of 3%
 Taxable at the rate of 5% : Fish frozen or dried, flours, meals and pellets of
fish, Ultra High Temperature (UHT) milk and cream, concentrated vegetables,
frozen grapes, raisins, nuts, spices, branded rice, Electric vehicles, etc., belong
to the tax bracket of 5%.
 Taxable at the rate of 12% : Fruit pulp or fruit juice based drinks, marble and
granite blocks, preserved fish, animal fats and oils, handmade matches, frozen
meat products, butter, cheese, ghee, pickles, sausage, fruit juices, tooth
powder, instant food mix, cell phones, sewing machine, handbags including
pouches and purses, jewellery box, mirrors etc., belong to this category.
 Taxable at the rate of 18%: Majority of the supplies are taxable at the rate of
18%.
 Taxable at the rate of 28%: Sunscreen, pan masala, dishwasher, paint,
cement, vacuum cleaner, automobiles, hair clippers, motorcycle, luxury
products, lotteries, etc., are the common items on which 28% tax is applicable.
Hotels, with room rent exceeding ₹7,500, movie tickets, betting on casinos and
racing are also subject to 28%

HSN CODE (Harmonized System of Nomenclature Code)

HSN (Harmonized System of Nomenclature) code stands for Harmonized

System of Nomenclature code. In India, under the Goods and Services Tax (GST)

19
regime, HSN codes are used to classify goods for taxation purposes. The HSN code
system is used globally to classify goods for customs and taxation.

HSN codes in Indian GST typically consist of six, eight, or ten digits, depending on
the level of specificity required for classification. These codes are used to categorize
goods for GST tax purposes.

For example, here are some general categories along with their HSN codes:

 Live Animals: 0101

 Meat and Edible Meat Offal: 0201
 Dairy Produce; Birds‟ Eggs; Natural Honey; Edible Products of Animal
Origin: 0401
 Live Trees and Other Plants; Bulbs, Roots, and the Like; Cut Flowers and
Ornamental Foliage: 0601

These are just a few examples. Each category and subcategory of goods will have its
own specific HSN code under the GST system. It's essential for businesses to
correctly classify their goods under the appropriate HSN codes to ensure accurate
taxation.

SAC CODE (Servicing Accounting Code)

In the Goods and Services Tax (GST) regime in India, SAC stands for
"Services Accounting Code." SAC is a system of classification developed by the GST
Council to categorize services for taxation purposes. Similar to HSN codes for goods,
SAC codes are used to classify different types of services provided by businesses.
SAC codes are numeric and typically consist of six digits. They are used to identify
and classify various services under GST. Each type of service is assigned a unique
SAC code, which helps in the uniform application of tax rates and simplifies
compliance.
For example, here are a few examples of SAC codes for different types of services:
SAC 999722: Accounting, bookkeeping, and auditing services
SAC 998311: Management consulting and management services, including financial,
strategic, and organizational advice

20
SAC 996511: Services provided by architects including architectural consultancy,
design, and engineering services
Businesses providing services need to determine the appropriate SAC code for the
services they offer and mention it in their invoices and GST returns for proper tax
compliance. It‟s essential for businesses to accurately classify their services under the
appropriate SAC codes to ensure compliance with GST regulations and to facilitate
the correct calculation and payment of taxes.

MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs)

MSMEs play a crucial role in economic development through the promotion

of entrepreneurship, job creation, and innovation. Governments worldwide implement
targeted policies and support programs to cater to the specific needs of MSMEs,
acknowledging their significance in driving economic growth, reducing poverty, and
enhancing local development. The classification of MSMEs may consider various
factors like investment in machinery, turnover, and workforce size. In essence,
MSMEs are essential for fostering economic resilience and inclusivity.

 Micro Enterprises: Manufacturing: Investment in plant and machinery does

not exceed INR 1 crore.Services: Investment in equipment does not exceed
INR 50 lakhs.
 Small Enterprises: Manufacturing: Investment in plant and machinery is
more than INR 1 crore but does not exceed INR 10 crores.Services:
Investment in equipment is more than INR 50 lakhs but does not exceed INR 5
crores.
 Medium Enterprises: Manufacturing: Investment in plant and machinery is
more than INR 10 crores but does not exceed INR 50 crores.Services:
Investment in equipment is more than INR 5 crores but does not exceed INR
20 crores.

MSMEs IN INDIA:
Micro, Small, and Medium Enterprises (MSMEs) are of utmost importance in the
Indian economy. This sector encompasses a diverse array of businesses that make

21
substantial contributions to both employment generation and GDP. The Government
of India has taken several measures to bolster MSMEs, such as facilitating easier
credit access, promoting technology up gradation, and establishing market linkages.

The MSME sector in India is highly diverse, encompassing a wide range of

enterprises involved in manufacturing, services, and trade. These enterprises are
classified based on their investment in plant and machinery or equipment. As of my
most recent update in January 2022, the classification is as follows:

To simplify and streamline the registration process for MSMEs, the government has
implemented the "Udyam Registration" process. This registration provides various
benefits to MSMEs, including access to credit facilities, subsidies, and priority in
government procurement.

In order to further support MSMEs, the government has introduced several schemes
such as the Credit Guarantee Fund Scheme, Technology Upgradation, Fund Scheme,
and various marketing assistance programs. Additionally, the implementation of the
Goods and Services Tax (GST) aims to simplify the taxation process for MSMEs.

Some additional aspects:

 Job Creation
 Access to Credit
 Adoption of Technology
 Market Connectivity
 Boosting Exports
 Skill Enhancement

TYPES OF MSMEs:

1. Manufacturing Enterprises: These are businesses that make things. Think of

factories where they produce items like clothes, food, machines, chemicals,
medicines, and much more. For example, when you buy a shirt or a pack of
cookies, these items are made by manufacturing enterprises.
2. Service Enterprises: These are businesses that provide services instead of
making physical products. Services can be anything from fixing your

22
 computer, delivering food, providing healthcare, offering transportation,
giving advice, or teaching. For instance, when you order food delivery or go to
a doctor's appointment, you're using services provided by service enterprises.

BENEFITS OF GST FOR MSMEs

 It might be challenging for an MSME to keep track of taxes paid at various

levels and have them adjusted to fit government needs. However, with GST,
even a minor transaction is automatically estimated with the applicable GST
rate without complicated tax computations.
 By consolidating all taxes under GST, MSMEs will be exempt from having to
register for several taxes and have greater freedom to engage in tax-free
commerce.
 Due to GST, trade between corporations and between states is now
unrestricted. For small and medium-sized businesses, which were formerly
limited by a single identification number, it has opened up a unified national
market.

The implementation of the Goods and Services Tax (GST) in 2017 has brought about
significant changes to India's tax system, reshaping the landscape of indirect taxation
in the country. The GST framework was designed to simplify tax procedures,
eliminate cascading effects, and promote a seamless market. However, its impact on
Micro, Small, and Medium Enterprises (MSMEs) has been a subject of extensive
discussion and examination.

23
 CHAPTER 4

DATA ANALYSIS AND INTERPRETATION

24
Table 1 : TABLE SHOWING TYPES OF ORGANAISATIONS

SL NO TYPES NO OF RESPONDENTS PERCENTAGE

1 MANUFACTURING 27 27%
2 SERVICE 20 20 %
3 RETAILER 35 35%
4 WHOLESALER 19 19%
TOTAL 100 100%

TYPE OF ORGANAISATIONS
40
35
30
25
20
15
10
5
0
MANUFACTURING SERVICE RETAILER WHOLESALER

Figure 1

INTERPRETATION:

Approximately 27% of survey participants are in manufacturing, 20% in services,

35% in retail, and 19% in wholesale.
This shows a diverse mix of MSMEs, with retailers playing a key role in the economy.

25
Table 2 : TABLE SHOWING THE REGISTRATION STATUS UNDER GST

SL NO OPTIONS NO OF RESPONDENTS PERCENTAGE

1 YES 90 90%
2 NO 10 10%
TOTAL 100 100%

FIGURE SHOWING THE REGISTRATION STATUS UNDER

GST
100
90
80
70
60
50
40
30
20
10
0
YES NO

Figure 2

INTERPRETATION:

The analysis of the core data reveals that 90% of MSMEs have been registered under
GST, representing a strong level of compliance.
10% remain unregistered, suggesting to a smaller portion. This information is
valuable in evaluating the influence of GST on the compliance and effectiveness of
MSMEs.

26
Table 3 : TABLE SHOWING DIFFICULTY LEVEL OF ORGANAISATION UNDER GST

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 STRONGLY AGREE 10 10%
2 AGREE 61 61%
3 NEUTRAL 21 21%
4 DISAGREE 1 1%
5 STRONGLY DISAGREE 7 7%
TOTAL 100 100%

FIGURE SHOWING DIFFICULTY LEVEL OF

ORGANAISATION UNDER GST
1% 11%
22%
STRONGLY AGREE

AGREE

NEUTRAL

DISAGREE

66%

Figure 3

INTERPRETATION:

A significant portion of respondents, specifically 71% (sum of "Strongly Agree" and

"Agree" responses), have faced difficulties in understanding GST registrations.
Additionally, a minority of respondents (1%) disagreed with this statement,
suggesting that a small portion did not experience difficulties. The neutral responses
(21%) indicate that there is a sizable portion of respondents who may not have a clear
opinion or experience regarding this aspect of GST registration.

27
Table 4 : TABLE SHOWING THE DIFFICULTY IN KEEPING UP WITH FREQUENT CHANGES IN
GST RULES

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 EXTREMELY DIFFICULT 9 9%
2 SOMEWHAT DIFFICULT 69 69%
3 NEUTRAL 12 12%
4 SOMEWHAT EASY 3 3%
5 EXTREMELY EASY 7 7%
TOTAL 100 100%

FIGURE SHOWING THE DIFFICULTY IN KEEPING UP

WITH FREQUENT CHANGES IN GST RULES

3% EXTREMELY DIFFICULT
7% 9%

SOMEWHAT DIFFICULT
12%

NEUTRAL

SOMEWHAT EASY
69%
EXTREMELY EASY

Figure 4

INTERPRETATION:

The majority of MSMEs (69%) express that it's somewhat difficult for them to keep
pace with the frequent changes in GST rules; this suggests that a significant portion of
these businesses encounter challenges in adapting to evolving regulations. A notable
percentage finds it extremely difficult, indicating that a subset of MSMEs faces
considerable hurdles in navigating the complexities of GST regulations. On the other
hand, only a small proportion (10%) finds it somewhat easy and extremely easy.

28
Table 5 : TABLE SHOWING THE ISSUES WITH FILING TIMELY GST RETURNS

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 YES,FREQUENTLY 5 5%
2 YES,OCCATIONLY 75 75%
3 NO,NEVER 10 10%
4 NOT APPLICABLE 6 6%
5 PREFER NOT TO SAY 4 4%
TOTAL 100 100%

FIGURE SHOWING THE ISSUES WITH FILING TIMELY GST

RETURNS

6% 4% 5%
10%
YES,FREQUENTLY

YES,OCCATIONLY

NO,NEVER

NOT APPLICABLE
PREFER NOT TO SAY

75%

Figure 5

INTERPRETATION:

The majority of respondents (75%) face occasional issues with timely filing of GST
returns. A smaller percentage (5%) encounters frequent issues. Only 10% reported
never facing issues, indicating a substantial portion of MSMEs facing challenges in
this aspect of GST compliance. Some respondents preferred not to disclose their
experiences, and a few marked their response as not applicable.

29
Table 6 : TABLE SHOWING THE DATA RELATED TO THE PENALTIES FACED BY THE
ORGANAISATIONS DUE TO NON COMPLIANCE OF GST REGULATIONS

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 YES 43 43%
2 NO 57 57%
TOTAL 100 100%

FIGURE SHOWING THE DATA RELATED TO THE

PENALTIES FACED BY THE ORGANAISATIONS DUE TO
NON COMPLIANCE OF GST REGULATIONS
60

50

40

30
Series1
20

10

0
YES NO

Figure 6

INTERPRETATION:

57% of respondents have not faced penalties or fines due to non-compliance,

indicating a decent compliance rate. 43% have encountered penalties, highlighting on-
going challenges with compliance.

This data underscores the need for support and guidance to improve MSMEs'
understanding of GST regulations and enhance their compliance practices, ultimately
reducing the risk of penalties and fines.

30
Table 7 : TABLE SHOWING THE IMPACT OF GST ON COST STRUCTURE

SL NO OPTION NO OF PERCENTAGE
RESPONDENTS
1 INCREASED SIGNIFICANTLY 11 11%
2 INCREASED MODERATELY 59 59%
3 NO SIGNIFICANT CHANGES 24 24%
4 DECREASED MODERATELY 3 3%
5 DECREASED MODERATELY 3 3%
TOTAL 100 100%

FIGURE SHOWING THE IMPACT OF GST ON COST

STRUCTURE
3% 3%
11%
INCREASED SIGNIFICANTLY

24%
INCREASED MODERATELY

NO SIGNIFICANT CHANGES

DECREASED MODERATELY

DECREASED MODERATELY
59%

Figure 7

INTERPRETATION:

59% experienced a moderate increase, 11% of respondents reported a significant

increase in their cost structure. About 24% noted no significant changes, and only 3%
reported a moderate decrease.

This suggests that a significant portion of MSMEs faced increased costs due to GST,
with a smaller proportion experiencing no notable changes or even cost reductions.

31
Table 8 : TABLE SHOWING THE IMPACT OF GST ON OVERALL COST OF RAW MATERIALS

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 INCREASED 14 14%
2 DECREASED 41 41%
3 UNCHANGED 8 8%
4 FLUCTUATED 28 28%
5 NOT SURE 9 9%
TOTAL 100 100%

FIGURE SHOWING THE IMPACT OF GST ON OVERALL

COST OF RAW MATERIALS
45
40
35
30
25
20
15
10
5
0
INCREASED DECREASED UNCHANGED FLUCTUATED NOT SURE

Figure 8

INTERPRETATION:

A significant portion (41%) reported decreased costs, indicating a positive effect for
many businesses. A sizable percentage (28%) experienced fluctuations, suggesting
diverse impacts across industries. Some (14%) faced increased costs, indicating
challenges for certain MSMEs. Meanwhile, a minority (8%) reported no change, and a
small portion (9%) expressed uncertainty.
Overall, the data shows the mixed effects of GST on raw material costs among
MSMEs

32
Table 9 : TABLE SHOWING THE IMPACT OF GST ON TRANSPORTATION COST

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 INCREASED 17 17%
2 DECREASED 44 44%
3 UNSURE 28 28%
4 NO CHANGE OBSERVED 11 11%
TOTAL 100 100%

FIGURE SHOWING THE IMPACT OF GST ON

TRANSPORTATION COST
11%
17%
INCREASED

DECREASED

28% UNSURE

NO CHANGE OBSERVED

44%

Figure 9

INTERPRETATION:

44% of respondents reported decreased transportation costs, 17% noted an increase.

Additionally, 28% expressed uncertainty about the impact, and 10% observed no
change.

These findings underscore the varied effects of GST on MSMEs' transportation

expenses, suggesting the need for further analysis to understand the specific factors
driving these outcomes.

33
Table 10 : TABLE SHOWING THE IMPACT OF GST ON PRICING STARATEGY ADJUSTMENTS

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 YES,SIGNIFICANTLY 22 22%
2 YES,TO SOME EXTENT 60 60%
3 NO,NOT AT ALL 10 10%
4 I AM NOT SURE 8 8%
TOTAL 100 100%

FIGURE SHOWING THE IMPACT OF GST ON PRICING

STARATEGY ADJUSTMENTS

8%
10% 22%
YES,SIGNIFICANTLY
YES,TO SOME EXTENT
NO,NOT AT ALL
I AM NOT SURE

60%

Figure 10

INTERPRETATION:

The structured questionnaire data collected on the impact of GST on MSMEs reveals
that a significant proportion (22%) of respondents had to adjust their pricing strategy
significantly in response to changes in cost structure post-GST implementation.
Additionally, a majority (60%) made some adjustments, while a smaller portion (10%)
reported no need for pricing strategy changes. A few respondents (8%) were unsure.

34
Table 11 : TABLE SHOWING THE IMPACT OF TECHNOLOGY ON IDENTIFYING AND
RECTIFYING ERRORS IN GST FILINGS

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 YES 52 52%
2 NO 27 27%
3 PARTIALY 17 17%
4 UNSURE 4 4%
TOTAL 100 100%

FIGURE SHOWING THE IMPACT OF TECHNOLOGY ON

IDENTIFYING AND RECTIFYING ERRORS IN GST FILINGS

4%

17%
YES
NO
52% PARTIALY

27% UNSURE

Figure 11

INTERPRETATION:

Approximately 52% of respondents believe that technology has indeed eased this
process, while 27% disagree. Another 17% perceive technology's impact as partial,
and 4% are unsure.

These findings shed light on the diverse viewpoints among MSMEs regarding the
effectiveness of technology in managing GST-related errors.

35
Table 12 : TABLE SHOWING THE IMPACT OF TECHNOLOGY ON ACCURACY OF GST RELATED
DATA MANAGEMENT

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 STRONGLY AGREE 19 19%
2 AGREE 57 57%
3 NEUTRAL 19 19%
4 DISAGREE 4 4%
5 STRONGLY DISAGREE 1 1%
TOTAL 100 100%

FIGURE SHOWING THE IMPACT OF TECHNOLOGY ON

ACCURACY OF GST RELATED DATA MANAGEMENT
4% 1%

19%
19% STRONGLY AGREE
AGREE
NEUTRAL
DISAGREE
STRONGLY DISAGREE
57%

Figure 12

INTERPRETATION:

The majority of respondents ( 57% ) believe that technology has improved the
accuracy of GST-related data management in the context of the impact of GST on
MSMEs. However, it's noteworthy that a portion of respondents (19% neutral, 4%
disagree, and 1% strongly disagree) have varying opinions or concerns about the
technology's impact on accuracy.

36
Table 13 : TABLE SHOWING THE IMPROVEMENT OF TRANSPARENCY AND TRACEABILITY OF
GST TRANSACTIONS DUE TO TECHNOLOGY INTEGRATION

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 YES 50 50%
2 NO 28 28%
3 SOMEWHAT 17 17%
4 UNSURE 5 5%
TOTAL 100 100%

FIGURE SHOWING THE IMPROVEMENT OF

TRANPARENCY AND TRACEABILITY OF GST
TRANSACTIONS DUE TO TECHNOLOGY INTEGERATION

5%
YES
17%
NO
50% SOMEWHAT
UNSURE
28%

Figure 13

INTERPRETATION:

A significant majority (50%) believe that technology has improved transparency and
traceability. However, a notable percentage (28%) responded negatively, indicating
that there's a portion sceptical about the positive impact. Additionally, 17% chose
"SOMEWHAT," suggesting a moderate perception. The 5% who are "UNSURE"
implies a degree of ambiguity or lack of clarity in respondents' views. Overall, the
data reflects diverse opinions on the role of technology in enhancing transparency and
traceability in GST transactions among MSMEs.

37
Table 14 : TABLE SHOWING THE COST SAVINGS RESULTING FROM TECHNOLOGY
INTEGRATION IN MANAGING GST ACTIVITIES

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 STRONGLY DISAGREE 14 14%
2 DISAGREE 27 27%
3 NEUTRAL 39 39%
4 AGREE 20 20%
5 STRONGLY AGREE - -
TOTAL 100 100%

FIGURE SHOWING THE COST SAVINGS RESULTING FROM

TECHNOLOGY INEGRATION IN MANAGING GST
ACTIVITIES

14%
20%
STRONGLY DISAGREE

DISAGREE

NEUTRAL
28%
AGREE

38%

Figure 14

INTERPRETATION:

A substantial 38% remain neutral, indicating uncertainty, while 28% disagree and
20% agree with the notion. A minority 14% strongly disagrees. The absence of data
on those strongly agreeing adds nuance. The findings highlight a varied perception
among respondents, emphasizing the need for deeper analysis to understand the
reasons behind these viewpoints.

38
Table 15 : TABLE SHOWING THE IMPACT OF GST ON MARKET EXPANSION

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 YES 61 61%
2 NO 21 21%
3 MAY BE 18 18%
TOTAL 100 100%

FIGURE SHOWING THE THE IMPACT OF GST ON

MARKET EXPANSION

18%

YES NO MAY BE

21%
61%

Figure 15

INTERPRETATION:

The survey results show that 61% of respondents believe their organization has
expanded market reach due to the unified tax structure under GST, indicating a
positive impact. However, 21% expressed a negative view, stating otherwise, while
18% were uncertain about the impact. This suggests a varied perception among
respondents, emphasizing the need for deeper analysis to understand the nuances and
reasons behind these perspectives on the impact of GST on MSMEs.

39
Table 16 : TABLE SHOWING THE IMPACT OF GST ON ORGANIZATION BENEFITS

SL NO OPTIONS NO OF RESPONDENTS PERCENTAGE

1 STRONGLY DISAGREE 12 12%
2 DISAGREE 33 33%
3 NEUTRAL 27 27%
4 AGREE 27 27%
5 STRONGLY AGREE 1 1%
TOTAL 100 100%

FIGURE SHOWING THE IMPACT OF GST ON

ORGANAISATION BENEFITS
1%

12%

27% STRONGLY DISAGREE

DISAGREE
NEUTRAL
33% AGREE
STRONGLY AGREE
27%

Figure 16

INTERPRETATION:

Around 45% of respondents either disagree or strongly disagree regarding the benefits
of increased transparency and reduced corruption with GST. About 27% are neutral,
while 27% agree or strongly agree, indicating a divided perception among MSMEs on
the impact of GST.

40
Table 17 : TABLE SHOWING THE IMPROVED COMPETITIVENESS IN MARKET DUE TO
STANDARDIZED TAXATION PROCEDURES UNDER GST

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 STRONGLY AGREE 12 12%
2 AGREE 52 52%
3 NEUTRAL 29 29%
4 DISAGREE 6 6%
5 STRONGLY DISAGREE 1 1%
TOTAL 100 100%

FIGURE SHOWING THE IMPROVED COMPETITIVENESS IN

MARKET DUE TO STANDARDIZED TAXATION
PROCEDURES UNDER GST
6% 1% 12%

STRONGLY AGREE

29% AGREE
NEUTRAL
DISAGREE
STRONGLY DISAGREE
52%

Figure 17

INTERPRETATION:

The responses to the question on the impact of standardized taxation procedures under
GST suggest that a significant majority (64%) of respondents, combining those who
strongly agree and agree, perceive an increased competitiveness in the market.
However, a notable portion (29%) remains neutral, indicating a lack of clear
consensus. A small percentage (6%) disagrees with the notion.

41
Table 18 : TABLE SHOWING THE CHANGES IN CONSUMER BEHAVIOR AND MARKET DEMAND
PATTERNS POST-GST IMPLEMENTATION

SL NO OPTION NO OF RESPONDENTS PERCENTAGE

1 YES 77 77%
2 NO 13 13%
3 SOMEWHAT 7 7%
4 UNSURE 3 3%
TOTAL 100 100%

FIGURE SHOWING THE CHANGES IN CONSUMER

BEHAVIOR AND MARKET DEMAND PATTERNS POST-GST
IMPLEMENTATION
3%

7%
YES
13% NO

SOMEWHAT

UNSURE
77%

Figure 18

INTERPRETATION:

From the responses to the question "Have you faced any changes in consumer
behaviour or market demand patterns since the implementation of GST?", it can be
interpreted that a significant majority, 77% have experienced changes. This suggests
a notable impact of GST on consumer behaviour or market demand patterns for the
surveyed MSMEs. Additionally, 13% have not observed any changes, 7% reported
somewhat changes, and 3% are unsure, indicating some variability in the perceived
impact among the respondents.

42
 CHAPTER 5

FINDINGS , SUGGESTIONS & CONCLUSIONS

43
FINDINGS

 The MSMEs are present in different sectors, including manufacturing, services,

retail, and wholesale. It is worth mentioning that retailers play a significant
role, highlighting their significance in the economy.
 Majority of the respondents are registered under the GST
 The data shows that a significant percentage of MSME participants faced
challenges in following GST registration, underscoring a common obstacle.
 A significant amount of MSMEs faced obstacles in staying updated with the
frequent modifications in GST regulations; it shows that the analysis highlights
the varied impact of GST on different MSMEs, with a notable portion facing
difficulties due to the complexities involved.
 A significant portion of MSMEs faces occasional difficulties in filing GST
returns on time, which indicates a notable problem in GST compliance.
 Based on the provided analysis, it can be concluded that a considerable
percentage of MSMEs have maintained good compliance as they haven't
received any penalties. It's quite alarming to see that 43.6% of people have
experienced penalties, which clearly shows that they have been struggling to
comply with regulations.
 The study about how GST affects MSMEs showed that many experienced a
slight increase in expenses. This means that a lot of MSMEs had to deal with
higher costs due to GST, highlighting the challenges they may face.
 A significant portion of MSMEs were found that they have obtained a slight
decrease in the overall cost of raw materials
 The study's findings on the effect of GST on MSMEs shows a varied response.
A considerable percentage experienced a reduction in transportation costs.
 Analysis of data regarding the impact of GST on MSMEs reveals that 22.6% of
participants made significant changes to their pricing strategies following the
implementation of GST.This range of responses underscores the diverse effects
of GST on pricing strategies of MSMEs, with a notable number adapting to
shifts in cost structures.

44
 MSMEs have different opinions on how technology impacts transparency and
traceability in the GST system. Many believe that technology has a positive
impact, but a considerable amount are unsure. The data shows the variety of
views on how technology influences GST transactions for MSMEs.
 The study shows that there are different opinions among participants regarding
the impact of GST on MSMEs. Many are uncertain. The absence of clear
support makes things more complex, emphasizing the importance of further
research to grasp the reasons behind these perspectives.
 The survey shows varied opinions on how technology affects transparency and
traceability in GST transactions among MSMEs.This highlights the need for
targeted solutions to address concerns
 The survey findings indicate that individuals hold varying viewpoints on the
subject, with a considerable number remaining impartial. It is intriguing to note
that nobody ardently backs the notion, whereas a few express disagreement,
and others express agreement. A minority strongly opposes it.
 The survey results show mixed opinions from MSMEs on the impact of GST
on transparency and corruption. According to the survey, almost half of the
people do not believe that GST has made transparency better and reduced
corruption. These varying opinions clearly show how complex the
consequences of GST can be.
 The analysis of responses to the question on the impact of standardized tax
procedures under GST shows that most of the respondents believe it has
enhanced competitiveness in the market. Yet, Many have neutral opinions, but
some disagree and highlight diverse perspectives..
 The survey revealed that 77% of MSMEs observed major shifts in consumer
behaviour and market demand patterns as a result of GST. On the other hand,
13% stated no changes, 7% mentioned minor changes, and 3% were unsure,
showing different viewpoints among participants.

45
SUGGESTIONS

 Enhance GST compliance by offering specific assistance and tools to the 10%
of unregistered MSMEs, boosting compliance rates and encouraging more
widespread involvement in the GST system.
 Streamlining and simplifying the tax framework, as well as offering accessible
guidance and training programs, can help MSMEs overcome the challenges of
understanding and keeping up with GST regulations.
 Provide support and guidance to MSMEs in overcoming challenges with
timely filing of GST returns. This includes offering user-friendly platforms
and conducting training programs on compliance procedures.
 Customize support measures to the unique requirements of various sectors
within the MSME ecosystem, acknowledging the varied impacts and
difficulties encountered by manufacturing, services, retail, and wholesale
segments.
 Offer assistance and encouragement to MSMEs in adjusting pricing strategies
post-GST, helping them to successfully manage changes in costs and market
trends.
 Further research and analysis are needed to understand the reasons behind the
different feedback and uncertainties in the survey. This will help policymakers
address issues and put targeted solutions into action more effectively.
 Enhance education and awareness initiatives to enhance MSMEs'
comprehension of GST, highlighting its advantages, regulatory obligations,
and support systems to encourage more involvement and adherence.

46
CONCLUSION

Studying the effects of GST on MSMEs provides important information about the
various obstacles, chances, and viewpoints in this crucial part of the economy. Many
MSMEs have followed the rules by registering under GST, but there are still
difficulties in grasping and following GST regulations. The complications of GST
registration, constant changes in regulations, and struggles with filing returns on time
highlight the necessity for specific help and educational programs to improve
compliance and reduce regulatory burdens.

Additionally, the results emphasize how GST affects various parts of MSME
operations in complex ways. Some MSMEs are spending more money, but others are
saving on transportation and becoming more competitive. Still, there are uncertainties
about how technology can make GST more transparent and traceable, and whether
GST is really effective in fighting corruption.

The introduction of GST has brought about various obstacles and chances for
MSMEs.Following the guidelines of GST can be tough because of the complex filing
process, limited resources, and lack of knowledge. Despite these difficulties, GST has
impacted the cost structure of MSMEs directly and indirectly, affecting factors like
availability of input tax credit and compliance expenses. Nevertheless, the integration
of technology has become crucial in enhancing the efficiency and effectiveness of
GST-related processes for MSMEs, facilitating easier filing and improved record-
keeping. Additionally, GST implementation has created new possibilities for MSMEs,
such as reaching a wider market, simplifying inter-state transactions, and the
opportunity to streamline operations through digital platforms. Looking ahead,
overcoming compliance obstacles and maximizing technology will be crucial for
MSMEs to fully benefit from the opportunities brought by GST while dealing with its
challenges.

47
ANNEXURE

48
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WEBSITES:
 https://www.indiacode.nic.in/
 https://msme.gov.in/
 https://gstcouncil.gov.in/
 https://www.researchgate.net/

50
 QUESTIONAIRE

A STUDY ON THE IMPACT OF GOODS AND SERVICE TAX ON

MICRO SMALL AND MEDIUM ENTERPRISES
1. Name of the organisation.
2. In which year the organisation has commenced?
3. Type of organisation.
☐ Manufacturing ☐ServiceRetailer ☐Wholesaler
4. Are you registered under GST ?
☐Yes ☐ No
5. Have your organisation faced difficulty in understanding GST regulations?
☐Strongly Agree ☐Agree ☐Neutral ☐Disagree ☐Strongly Disagree
6. Is it difficult to keep up with frequent changes in GST rules ?
☐Extremely Difficult ☐Somewhat Difficult ☐Neutral ☐Somewhat Easy
☐Extremely Easy
7. Have you faced issues in timely filing GST returns ?
☐Yes, Frequently ☐Yes, Occasionally ☐No, Never ☐Not Applicable
☐Prefer Not To Say
8. Have you faced any penalties or fines due to non-compliance with GST
regulations?
☐Yes ☐No
9. Have you faced any direct changes in your cost structure since the
implementation of GST ?
☐Increased Significantly ☐Increased Moderately ☐No Significant
Changes
☐Decreased Moderately ☐Decreased Significantly
10. How has the overall cost of raw materials been affected by GST ?
☐Increased ☐Decreased ☐ Unchanged ☐Fluctuated ☐Not Sure
11. Have you experienced any changes in transportation cost due to GST ?
☐Increased ☐Decreased ☐ Unsure ☐No Change Observed

51
12. Have you had to adjust your pricing strategy due to changes in your cost
structure after the implementation of GST ?
☐Yes, Significantly ☐Yes, To Some Extend ☐No, Not At All
☐I Am Not Sure
13. Has technology made easier to identify and rectify errors in GST filing ?
☐Yes ☐No ☐Partially ☐Unsure
14. Would you say that technology has improved the accuracy of GST related data
management ?
☐Strongly Agree ☐Agree ☐Neutral ☐Disagree ☐Strongly Disagree
15. Would you say that technology has improved transparency and traceability of
GST transactions?
☐Yes ☐No ☐Somewhat ☐Unsure
16. Has technology integration lead to cost saving in managing GST related
activities ?
☐Strongly Disagree ☐Disagree ☐Neutral ☐Agree ☐Strongly Agree
17. Have your organisation now able to expand your market reach due to unified
tax structure under GST?
☐Yes ☐No ☐May Be
18. Are your organisation benefiting from increased transparency and reduced
corruption in taxation system with GST?
☐Strongly Disagree ☐Disagree ☐Neutral ☐Agree ☐Strongly Agree
19. Are you now more competitive with the market due to standardised taxation?
☐Strongly Agree ☐Agree ☐Disagree ☐Strongly Disagree
20. Have you faced any changes in consumer behaviour or market demand
patterns since the implementation of GST ?
☐Yes ☐No ☐Somewhat ☐Unsure

52