analysis of impact of gst with reference to perspective of ... · keywords: gst, gst for fuel,...
Post on 25-May-2020
18 Views
Preview:
TRANSCRIPT
Analysis of impact of GST with reference to Perspective of Small
Business Stakeholders
1Dr.V.R.Nedunchezhian,2Mr. Sridhar Babu, 3Dr. M. Bharathi,
1Professor, Department of Management, Kumaraguru College of Engineering,
Coimbatore,Tamil Nadu, India 2Placement officer, Firebird Institute, Coimbatore, Tamil Nadu, India
3Professor, Department of Electronics and Communication Engineering, Kumaraguru College of
Technology, Coimbatore, Tamil Nadu, India, 1vrn@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
International Journal of Pure and Applied MathematicsVolume 119 No. 17 2018, 2357-2367ISSN: 1314-3395 (on-line version)url: http://www.acadpubl.eu/hub/Special Issue http://www.acadpubl.eu/hub/
2357
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]
International Journal of Pure and Applied Mathematics Special Issue
2358
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]
International Journal of Pure and Applied Mathematics Special Issue
2359
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.
International Journal of Pure and Applied Mathematics Special Issue
2360
Overall
Impact
Filing
Process
Proce
ss
Imple
menta
tion
Impact
on
Business
Operatio
ns
Impact on
Business
Flow
Inpu
t Tax
Bene
ficial
Negative
Impact of
Monthly
Filings
Overall
Impact 1
Filing
Process 0.68 1
Process
Implementati
on
0.82 0.51 1
Impact on
Business
Operations
0.01 0.05 0.02 1
Impact on
Business
Flow
-0.05 -0.16 0.01 -0.13 1
Input Tax
Beneficial -0.11 -0.21 -0.18 0.13 0.11 1
Negative
Impact of
Monthly
Filings
-0.05 -0.10 -0.07 0.02 -0.03 0.17 1
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
Impac
t
Filing
Proce
ss
Process
Implemen
tation
Business
Operation
Impact
Business
Flow
Impact
Input Tax
Credit
Benefit
Negative
Impact of
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
International Journal of Pure and Applied Mathematics Special Issue
2361
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
Sum
232.0
0
204.0
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
df SS MS F
Signific
ance F
Regression 6
116.3782
611
19.39
638
36.6697
8295
1.8117
E-19
Residual 68
35.96840
558
0.528
947
Total 74
152.3466
667
Coeffici
ents
Standard
Error t Stat P-value
Lower
95%
Uppe
r 95%
Lowe
r
95.0
%
Upper
95.0%
Intercept
-
0.45019
6397
0.540287
025
-
0.833
25
0.40761
8685
-
1.52832
237
0.627
93
-
1.528
32
0.62792
9574
Filing
Process
0.37043
426
0.071248
517
5.199
186
1.99734
E-06
0.22826
006
0.512
608
0.228
26
0.51260
8462
Process
Implementati
on
0.79307
7234
0.085054
369
9.324
356
8.79481
E-14
0.62335
388
0.962
801
0.623
354
0.96280
0584
International Journal of Pure and Applied Mathematics Special Issue
2362
Impact on
Business
Operations
-
0.02886
8639
0.066620
657
-
0.433
33
0.66614
7548
-
0.16180
809
0.104
071
-
0.161
81
0.10407
0813
Impact on
Business
Flow
-
0.01502
5424
0.068572
218
-
0.219
12
0.82721
4308
-
0.15185
915
0.121
808
-
0.151
86
0.12180
8306
Input Tax
Beneficial
0.08675
7785
0.068712
761
1.262
615
0.21104
026
-
0.05035
639
0.223
872
-
0.050
36
0.22387
1965
Negative
Impact of
Monthly
Filings
0.01983
3953
0.063252
635
0.313
567
0.75480
9607
-
0.10638
471
0.146
053
-
0.106
38
0.14605
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
International Journal of Pure and Applied Mathematics Special Issue
2363
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
[1] avb, "zxv," pp. 23-34, 2-15.
[2] M. Sehrawat and U. Dhanda, "GST IN INDIA: A KEY TAX REFORM,"
©International Journal of Research; Vol.3 (Iss.12), pp. 1-9, 2015.
[3] S. Rani, "A research paper on goods and service tax (GST) and its impact on Indian
economy," International Journal of Advanced Research and Development; Volume 2;
Issue 5;, pp. 1-4 , 2017.
[4] R. Rupa, "GST IN INDIA AN OVERVIEW," Research Gate, pp. 1-3, 2017.
[5] L. F and X. P, "A study on implementation of goods and services tax (GST) in India:
Prospectus and challenges," International Journal of Applied Research, Volume 3, Issue
1, pp. 626-629, 2017.
[6] I. Singh and A. Nayyer, "A Comprehensive Analysis of Goods and Services Tax (GST)
in India," INDIAN JOURNAL OF FINANACE ; Volume 12, Issue 2,, 2018.
[7] S. Abda, "RESEARCH PAPER ON EFFECTS OF GOODS AND SERVICES TAX ON
INDIAN ECONOMY," RESEARCH JOURNAL; Volume 3, Number 5, 2017 .
[8] P. Kumar and S. S. Sarkar, "Goods and service tax in India: problems and prospects,"
International Journal of Pure and Applied Mathematics Special Issue
2364
ASIAN JOURNAL OF MANAGEMENT RESEARCH; Volume 6 Issue 3, pp. 1-10, 2016.
[9] R. R. Desai and A. D. Patel, "GOODS AND SERVICES TAX IN INDIA: AN
OPPORTUNITIES AND CHALLENGES," International Journal of Current Research;
Volume 7, Issue 11, pp. 1-3, 2015.
[10] S. Shaik, S.A.Sameera and et.al, "Does Goods and Services Tax (GST) Leads to Indian
Economic Development?," IOSR Journal of Business and Management ;Volume 17,
Issue 12, pp. 1-5, 2015.
[11] S. G and C. P. Sathish, "Goods and Service Tax (GST): As A New Path in Tax Reforms
in Indian Economy," International Journal of Research in Finance & Marketing,
Volume 7, Issue 3, pp. 55-74, 2017 .
[12] Pooja.S.Kawle and Yogesh.L.Aher, "GST: An economic overview: Challenges and
Impact ahead," International Research Journal of Engineering and Technology (IRJET);
Volume: 04 Issue: 04, pp. 1-4, 2017.
[13] S. M. A. Taqvi, Amit Kumar Srivastava and et.al, "Challenges and Opportunities of
Goods and Service Tax (GST) in India," International Journal of Applied Research;
Volume : III, Issue, 2013.
[14] D. Amutha, "Economic Consequences of GST in India," SSNR, pp. 1-5, 2018 .
[15] G. Garg, "Basic Concepts and Features of Good and Service Tax In India," International
Journal of scientific research and management (IJSRM) ; ||Volume||2||Issue||2|, pp.
542-549, 2014.
[16] P. Debnath, "Implementation of Goods and Service Tax (GST) in India and its Control
over the Tax Collection," Journal of Commerce and Trade, Society for Advanced
Management Studies, vol. 11(1), pp. 28-35, 2016 .
[17] M. Kumar, "Exclusive: India eyes spending cuts as glitches in GST hit revenue," 7 May
2018. [Online]. Available: https://in.reuters.com/article/india-economy-deficit/exclusive-
india-eyes-spending-cuts-as-glitches-in-gst-hit-revenue-idINKCN1BU0DJ. [Accessed 7
May 2018].
[18] D. Sarkar, "Log-in error, missing data, multiple deadlines: GST is tripping up on
technical glitches," 25 2018 May . [Online]. Available:
https://scroll.in/article/850981/log-in-error-missing-data-multiple-deadlines-gst-is-
tripping-up-on-technical-glitches. [Accessed 25 2018 May ].
[19]
S. Kumawat, "How to File GST Returns Online in India," 17 May 2018. [Online].
Available: https://blog.saginfotech.com/how-file-gst-return-online-india. [Accessed 17
May 2018].
International Journal of Pure and Applied Mathematics Special Issue
2365
[20]
[21]
[22]
Sujatha.k,Persis Urbana Ivy, Sherin.J,Shilpa," Life Saver Web Application: A Review",
International Journal of Pure and Applied Mathematics (IJPAM), Volume 117,issue. 22,
pp no. 239-242, 2017.
v.senthilkumar, b.vinoth kumar, p.saranya “Normalized pagecount and textbased metric
for computing semantic similarity between webdocuments”, “Journal of advanced
research in dynamical and control systems” volume 9.,issue– 6 / 2017pp1865-1875
IIrfan Ahmed Mohammed Saleem, Dr. S. Jaisankar (2018), A Study On Kaizen Based
Soft-Computing In Electric Vehicle Manufacturing Processes, International Journal Of
Innovations In ScientificAnd EngineeringResearch,Volume5,Issue5,.31-39.
[23] L. Marlow and E. Curran, "Bribes, Borders and Middlemen: Why India’s GST Is a
Game Changer," 23 May 2018. [Online]. Available:
https://www.bloomberg.com/news/articles/2017-06-20/bribes-borders-and-middlemen-
why-india-s-gst-is-a-game-changer. [Accessed 23 May 2018].
[
International Journal of Pure and Applied Mathematics Special Issue
2366
top related