International Journal of Pure and Applied Mathematics

Volume 119 No. 17 2018, 2357-2367

ISSN: 1314-3395 (on-line version)
url: http://www.acadpubl.eu/hub/
Special Issue
http://www.acadpubl.eu/hub/

Analysis of impact of GST with reference to Perspective of Small

Business Stakeholders
1
Dr.V.R.Nedunchezhian,2Mr. Sridhar Babu, 3Dr. M. Bharathi,
1
Professor, Department of Management, Kumaraguru College of Engineering,
Coimbatore,Tamil Nadu, India
2
Placement officer, Firebird Institute, Coimbatore, Tamil Nadu, India
3
Professor, Department of Electronics and Communication Engineering, Kumaraguru College of
Technology, Coimbatore, Tamil Nadu, India,
1
vrn@kctbs.ac.in

Abstract

India has transitioned to GST implementation last year. Since the launch of the
uniform tax system, there are many gaps that are encountered in the implementation of the
system. This report is focused on the key issues both positive and negative that are discussed
among the public domain and the industrial circles. Pointing to the key issues that are
discussed vividly among the public, the impact survey is conducted with small and micro
business traders for response on the overall impact of GST on their business and some
significant factors that are impacting the actual outcome. It is imperative from the response
survey that the opinions of the respondent’s areneither too neither negative nor positive and
it’s in a balanced condition. If the government can ensure to address some of the teething
issues, the process could lead to sustainable economic development in the country.

Keywords: GST, GST for Fuel, GSTIN, GSTIN Network, GST impact

1. Introduction

One year of implementing the GST structure in India has amassed both positive and
negative responses from the individuals and the customers. GST (Goods and Services Tax) is
a significant step intended towards simplifying the giant tax structure to support stakeholder
benefits. Prior to GST implementation, there were more many indirect taxes and cess that
were applicable depending on the business segment. [1] There were mixed views and
opinions prevailing in the public domain about the pros and cons of GST implementation, the
gamut of how the solution is implemented and weighing the scales of implementation
efficacy.

The impact of GST has a direct weight on two key segments. One, to the businesses and
the other to the end customers those bearing the tax costs on the goods purchased and

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services availed. It is imperative from the number of amendments that are taking place
regularly from the GSTN committee meetings that the process is still evolving and is yet to
settle. [2]

In the other dimension, in India, unorganized business sector also contributes

significantly to the growth of country’s GDP. Small and medium scale business, cottage
industries and the other such fragments has witnessed the transition to GSTIN network and
many of the non service tax registered companies too have under the ambit of GST and are
bound to collect taxes from the customers. [1]

While the GSTIN system has certainly brought in the transparency in to the taxing system
and has eased the complexities, the debates pertaining to GSTIN implementation is still on.
[3]This study explores the key factors that have become a debatable scenario in the GST
implementation and the perception of some of the small scale businesses about the GST
implementation scenario.

GST Implementation in India

Defining GST
GST is aimed at simplifying the indirect tax structure by evading many of the indirect
taxes and focusing on single indirect taxing policy. It is a comprehensive levy on
manufacturing, services, and sales at a national level. The GST bill is profoundly expected to
bring uniformity in to the system and focus on effective implementation of the system. [4]

Amalgamation of the central and state level taxes in to one single tax system is
targeted to enhance the position of India in both the domestic and also at the global markets.
It is believed in the industry circles that full-fledge implementation of GST shall reduce the
tax burden to the consumers to an extent of 25-30%. [3]

The facility of input tax credit system for GSTIN registered business is designed to
mitigate any cascading effects on inputs that go in to the production or offering services to
the customers. It is imperative that such a model should reduce the production or service
related taxes and hence the end consumers get benefited. [5] [6]

Some of the key factors related to GST implementation are

 It is a one country one tax regime and shall subsume all the indirect taxes levied by
both state and centre.
 Increased transparency and layman understanding of the taxing process
 A dedicated information network that supports in hassle free taxing system
 Targeted to create business friendly environment [6]

GSTIN network in India is completing one year shortly, and still the process related
developments are being debated across by various stakeholders of the industry. As mentioned
in the afore sections, policy changes that are taking place during the GSTIN committee
meetings signify that there is more procedural changes are envisaged. [7] [9]

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However, since implementation, some of the key issues in the implementation scenario that
has gained the attention of industry stakeholders and is bound to impact the business scenario
and the objective of implementing the GST system. [8]

Key Issues Debated for GST

GSTIN Network

GSTIN network is a specifically designed portal that is introduced by the Govt. of

India for enabling the businesses to register for GST and to file the returns regularly. [11]
From the day the system is launched for businesses, there were too many technical glitches
that were encountered in the system. [9] Millions of businesses were to sign up for the GST
registration number and the system has encountered the load factor and the issues were
encountered for many months, before the glitches were addressed. [2] [12]

Complexity in the Filing Process

Despite that the process of filing is moved to online platform and the process is eased,
still there were many complexities encountered by the small businesses. [13] As in the case of
many small businesses and cottage industry companies , the complexity of filing too many
returns in a monthly period and the extensive set of data that has to be fed to the system was
felt a challenging process. Multiple slabs of filing process like GSTR-1, GSTR-2, GSTR-3B
is turning out to be a complex factor for many of the small scale businesses and individual
traders, which is imperative as issue of concern for the businesses. [2]

The quantum of filings that has taken place in the first few months of GST
implementation has gradually started losing figures and the number of filings that were
happening was remarkably down. Such conditions could be attributed to the gaps in the
system and the process related issues. [6]

Tax Slabs

Current tab slabs for GST implementation has four different slabs (0%, 5%, 12, %,
18% and 28%). Post implementation of GST there were numerous changes to the number and
category of products that fall under respective categories. Issues pertaining to too many
products under different categories, confusions pertaining to the classification of finished
goods and non-finished goods category, some of the products classified initially under the
luxury products categories indicate the kind of challenges and limitations that are
encountered in the process of implementing GST. [9] [6]

Fuel under GST Ambit

The other majorly debated aspect post implementation of GST in India is about the
issues pertaining to bringing fuel under the GST scenario. Still, fuel prices in India are under
the old tax slabs. [1]There are many contravention issues between state and centre pertaining
to bringing fuel to the GST circuit. It is certain that if the fuel prices are brought under GST,
it will have impact on the exchequer revenues for the states and also for the centre. [2]

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GST taxes Payments

One of the common challenges discussed across the business verticals is the issue
pertaining to making monthly payments of taxes invoiced to the customers. In the current
schema, once the invoice is generated, irrespective of the receipts against the invoice,
businesses are imperative to make payments for the respective tax values. [15] In the case of
the pending invoices, and bad debts the load factor on the small businesses is being huge, and
it is leading to malpractices in the business models. [10] Despite that there are numerous
other issues too that are being debated issues in the case of GST implementation; the
aforesaid factors are major impact conditions. [9]

Impact Survey

Focusing on the small businesses that were in to GST registration, a survey is

conducted targeting the small and micro businesses. [17] The target segment is chosen from
the industrial and service sector. In the service sector the target groups were profoundly from
the unorganized sector and the ones that have come to GST ambit post the implementation.
The following statistics is the consolidation of the impact survey conducted and the process
related inputs pertaining to the same. [10]

The figure below reflects on the impact inputs gathered from various respondents on
how they have felt the key aspects of GST implementation are impacting their business and
the overall business impact.

Figure 1 Respondents to Survey

The key factors that are considered in the survey conducted are about the overall
impact of GST, the rating for implementation process,[20] GSTIN system rating, impact on
the business and operations, issues pertaining to the monthly filing conditions. The key inputs
that are gathered from the process are consolidated for all the 75 respondents from which the
inputs are gathered.

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Proce Impact
Inpu Negative
ss on Impact on
Overall Filing t Tax Impact of
Imple Business Business
Impact Process Bene Monthly
menta Operatio Flow
ficial Filings
tion ns
Overall
1
Impact
Filing
0.68 1
Process
Process
Implementati 0.82 0.51 1
on
Impact on
Business 0.01 0.05 0.02 1
Operations
Impact on
Business -0.05 -0.16 0.01 -0.13 1
Flow
Input Tax
-0.11 -0.21 -0.18 0.13 0.11 1
Beneficial
Negative
Impact of
-0.05 -0.10 -0.07 0.02 -0.03 0.17 1
Monthly
Filings

Table 1 Correlation Analysis

From the correlation analysis, it is imperative that there is strong correlation among
the process implementation impact and its impression on the overall ratings that are provided
by the respondents of the survey.

The descriptive statistics depicted below for the overall impact process indicates that
the mean rating of the respondent survey is 3.09 reflecting that the impact is marginally tilted
to positive response in terms of overall GST implementation. [22]From the mean analysis of
the various factors that are considered significant, only the filing process is considered and
the negative impact of filing process ( delay in receivables and paying GST, high penalty
conditions) etc. are some of the key observations in the process.

Overa
ll Filing Process Business Business Input Tax Negative
Impac Proce Implemen Operation Flow Credit Impact of
t ss tation Impact Impact Benefit Filing process
Mean 3.09 2.72 2.87 3.59 3.33 3.93 3.77
Standar
d Error 0.17 0.16 0.13 0.15 0.15 0.15 0.16
Median 3.00 3.00 3.00 4.00 4.00 4.00 4.00
Mode 5.00 1.00 3.00 5.00 4.00 5.00 5.00
Standar 1.43 1.42 1.17 1.30 1.28 1.30 1.36

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d
Deviati
on
Sample
Varianc
e 2.06 2.02 1.36 1.68 1.63 1.68 1.85
Kurtosi
s -1.33 -1.40 -0.94 -0.71 -0.82 -0.12 -0.52
Skewne
ss -0.03 0.05 -0.31 -0.60 -0.42 -1.02 -0.83
Range 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Minimu
m 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Maxim
um 5.00 5.00 5.00 5.00 5.00 5.00 5.00
232.0 204.0
Sum 0 0 215.00 269.00 250.00 295.00 283.00
Count 75.00 75.00 75.00 75.00 75.00 75.00 75.00
Table 2 Descriptive Analysis

Regression Statistics
Multiple R 0.874016142
R Square 0.763904217
Adjusted R Square 0.743072236
Standard Error 0.727287523
Observations 75
ANOVA
Signific
df SS MS F ance F
116.3782 19.39 36.6697 1.8117
Regression 6 611 638 8295 E-19
35.96840 0.528
Residual 68 558 947
152.3466
Total 74 667

Lowe
r
Coeffici Standard Lower Uppe 95.0 Upper
ents Error t Stat P-value 95% r 95% % 95.0%
- - - -
0.45019 0.540287 0.833 0.40761 1.52832 0.627 1.528 0.62792
Intercept 6397 025 25 8685 237 93 32 9574
Filing 0.37043 0.071248 5.199 1.99734 0.22826 0.512 0.228 0.51260
Process 426 517 186 E-06 006 608 26 8462
Process
Implementati 0.79307 0.085054 9.324 8.79481 0.62335 0.962 0.623 0.96280
on 7234 369 356 E-14 388 801 354 0584

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Impact on - - - -
Business 0.02886 0.066620 0.433 0.66614 0.16180 0.104 0.161 0.10407
Operations 8639 657 33 7548 809 071 81 0813
Impact on - - - -
Business 0.01502 0.068572 0.219 0.82721 0.15185 0.121 0.151 0.12180
Flow 5424 218 12 4308 915 808 86 8306
- -
Input Tax 0.08675 0.068712 1.262 0.21104 0.05035 0.223 0.050 0.22387
Beneficial 7785 761 615 026 639 872 36 1965
Negative
Impact of - -
Monthly 0.01983 0.063252 0.313 0.75480 0.10638 0.146 0.106 0.14605
Filings 3953 635 567 9607 471 053 38 2621

Table 3 Regression Analysis

In terms of the impact of the other factors upon the overall impact that is carried out
on the implementation of GST, it is imperative that the overall impact factor is significantly
influenced by the outcome envisaged in the process is positively impacted by the input tax
credit benefits that are available and is highly influenced in a negative scenario by the
negative factors combination like clearing taxes[23] before invoice realization, heavy
penalties for delay payments, complexity of depicting CGST, IGST and SGST in a
categorical manner.

Impact Analysis
GST is not a contemporary tax structure and it is proven and globally accepted model
of taxing system. However, considering the demographics, socio economic conditions and the
size of the Indian economy, the implementation has encountered many teething problems. It
is evident from the industry reports, GST filing information and the impact survey inputs that
the scope of GST implementation has led to some interim challenges for the small and micro
business segment. [18] Though in larger context, the impact might have been the same to the
large scale businesses too, still this result subsumes only on the impact for small and micro
business segment. [19]

It is very important that the government as a major stakeholder has to focus on the
ground level issues of implementation. For instance, if the issues of complexities in the
returns filing process are eased, it could trigger more regular filings from many of the small
traders. [4]Despite that the process is currently under review by the implementation
committee, still the action needs to be faster to ensure momentum in the system. [21]
Simplifying the process of filing and reducing the number of filings that are required can ease
the process to great extent. [10]

From the descriptive statistics that is estimated for the responses on the overall impact
of GST, the average ranking is 3.09 which indicate a moderate and balanced set of views
from the respondents. Understanding the factors that the process is at early stages and there is

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need for robust and significant levels of system development, it can be stated that if the key
issues that are plaguing the implementation are addressed in quick turnaround, GST can be a
good platform of tax structure contributing to the economic growth of the nation. [3]

4. Conclusion
GST tax structure in India was launched in economic reform conditions, to embrace
the global practice, thus increasing the transparency in the system, easing complexities and
enabling simple taxation structure. Considering the socio economic position of the country,
the launch of the GST system is certainly a revolutionary development.

In the eve of nearing one year post launch, the study reflects that few of the
significant issues like fuel under GST ambit, need for improvising the GSTIN network and
other such related trends are turning out to be the bottle neck factors towards realising the
actual outcome of GST implementation. In lines with the impact survey conducted with small
and micro businesses, it is evident that the people rate the impact of GST as a balance and
there is potential scope for improvement in the process. However, to ensure smooth and
successful outcome ensuring that the implementation system is managed addressing the gaps
in the process is very important. If such measures are taken up by the government in a rapid
pace, it can be very resourceful outcome for sustainable economic development.

5. References
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[3] S. Rani, "A research paper on goods and service tax (GST) and its impact on Indian
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[4] R. Rupa, "GST IN INDIA AN OVERVIEW," Research Gate, pp. 1-3, 2017.

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INDIAN ECONOMY," RESEARCH JOURNAL; Volume 3, Number 5, 2017 .

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[10] S. Shaik, S.A.Sameera and et.al, "Does Goods and Services Tax (GST) Leads to Indian
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[11] S. G and C. P. Sathish, "Goods and Service Tax (GST): As A New Path in Tax Reforms
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