A

INDUSTRIAL EXPOSURE-PROJECT REPORT ON

" IMPACT OF GST ON SMALL BUSINESSES"

SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSIT&
DEPARTMENT OF ACCOUNTING AND TAXATION (B.VOC)

IN PARTIAL FULFILLMENT OF THE

ACCOUNTING AND TAXATION DEGREE OF T.Y.B.VOC

SUBMITTED BY MISS. JYOTI BALKRUSHNA LOLE

Rayat Shikshan Sanstha's

S. M. JOSHI COLLEGE, HADAPSAR, PUNE

Hadpsar Pune-411028

UNDER THE GUIDANCE OF

PROF. MRS. JYOTI P. BADAGE

2024-2025
 ACKNOWLEDGEMENT

I would like to take this opportunity to thank Dr. KISHOR KAKADE SIR.
(PRINCIPAL) Of The S.M.JOSHI, HADAPSAR.to have provided me with
such a great opportunity to work on this research project.

I am indeed thankful to PROF. JYOTI BADAGE, my teacher guide for her

constant support and guidance throughout the report work, without which I
could not have completed this work.

I am grateful to all the respondent of the questionnaire for being so much

cooperative and patient to fill the required answer in the questionnaires. The
project would not have been such a success without their contribution.

Last, but not the least, I would like to thank my family, friends and all those who
helped me in some way or the other in the successful completion of this research
project.
 A
PROJECT REPORT ON

 " IMPACT OF GST ON SMALL BUSINESS"

SUBMITTED TO SAVITRIBAI PHULE PUNE UNIVERSITY

&
DEPARTMENT OF ACCOUNTING AND TAXATION

IN PARTIAL FULFILLMENT OF THE

ACCOUNTING AND TAXATION OF T.Y.B.VOC SUBMITTED BY

MISS. JYOTI BALKRUSHNA LOLE

Rayat Shikshan Sanstha's ,

S. M. JOSHI COLLEGE, HADAPSAR, PUNE.
Hadpsar Pune-411028

UNDER THE GUIDANCE OF

Mrs. JYOTI P. BADAGE

2024-2025
 DECLARATION

I JYOTI BALKRUSHNA LOLE hereby declare that the project Entitled,

“A STUDY ON THE IMPACT OF GST ON NON- PROFESSIONALS”
(BUSINESSMAN AND SELLERS)” submitted to ‘S.M.JOSHI COLLEGE
HADPSAR ,PUNE.’ is a record of original work done by me under the guidance
of PROF. JYOTI P. BADAGE Any inferences, research or similarity is purely
coincidental.The present work is of original nature. The conclusions and
recommendations are independently drawn based on primary and secondary data

To the best of my knowledge and belief, this work has not formed the basis for the
award of any Degree, Diploma or similar title of this or any other University.

JYOTI BALKRUSHNA LOLE

B.voc Accounting and Taxation ( third year)
 ABSTRACT

The objective of the study “A STUDY ON THE IMPACT OF GST ON NON

PROFESSIONALS”(BUSINESSMAN AND SELLERS) is to know the

impact of GST on sales of seller and to provide a conceptual framework of GST

and its salient features. The data was collected through structured questionnaire

(Google form). Secondary data is used to study past research papers and different

books related to the topic to enhance clear knowledge about the topic. The

analysis of the primary data has been done percentage method and chi square test.

It was found from the study that there is no such impact of GST on the sales of

the sellers. It also bring in the light various benefits and limitations of GST. As

well as the research also help to provide a wider scope on how business have

adapted GST and have gained or loss from it.

 Rayat Shikshan Sanstha's S.M.Joshi College
Hadapsar, Dist-Pune 28
NAAC - Re-accredited "A" Grade College
Affiliated to Savitribai Phule Pune University ID.No.PU/PN/ASC/069/(1986)

Department of Commerce
Graduation of Commerce

*CERTIFICATE *

Industrial Exposure-Project Work

This is to certify that, MRS.JYOTI BALKRUSHNA LOLE of Accounting and

taxation Exam Seat No. 2758 has satisfactorily completed Research Project in
the academic year 2024-25. The title of Research Project is "

“IMPACT OF GST ON SMALL BUSINESS"

Subject:- Project Work

Prof. Manoj Chitale Prin. Dr. Kishor Kakade

(Co-ordinater, B.Voc) ( Principal)

 Rayat shikshan sanstha's

S.M.Joshi College
Hadapsar, Dist-Pune 28

STUDENT NAME : MISS. JYOTI BALKRUSHNA LOLE

CLASS : T.Y.B.VOC EXAM SEAT NO – 2857

ROLL NO-SUBJECT- 2857

INDUSTRIAL EXPOSURE -PROJECT WORK

Title Of The Industrial Exposure-Research Project :

“ IMPACT OF GST ON SMALL BUSINESS"

DATE :

SUBJECT TEACHER HEAD OF DEPARTMENT

INTERNAL EXAMINER EXTERNAL EXAMINER

 Index
Sr.no. CONTENT Page No.

1 1 Introduction
1.1 About the topic 9
1.2 Significance of the topic 12
2 2 Literature review 13

3 3 Objectives of Research

3.1 Objectives of the research study 14

4 4 Research methodology
4.1 Changes In Regime Structure 15
4.2 How GST Work in small Business 16
4.3 Opportunities With GST 18
4.4 GST Composition Scheme 19
4.5 Formalization of Business 20
4.6 Small Businesses and Working of GST 23
4.7 Relation Between GST rates and Pricing 24

5 Benefits of GST on small Business

5.1 Points on Benefits 25

5.2 Chart working 28
5.3 Question Related To Impact Of GST 33
5.4 Negative Impact Of GST On Small Business 34

6 Reaserched Points

6.1 Findings 25

6.2 Suggestions 37
6.3 Conclusion 38
6.4 Scope for future Research 41
 CHAPTER I - INTRODUCTION

1.1 ABOUT THE TOPIC :

What is GST?
GST is an Indirect Tax which has replaced many Indirect Taxes in India. The
Goods and Service Tax Act was passed in the Parliament on 29th March 2017.
The Act came into effect on 1st July 2017; Goods & Services Tax Law in India
is a comprehensive, multi-stage, destination-based tax that is levied on every
value addition.
In simple words, Goods and Service Tax (GST) is an indirect tax levied on the
supply of goods and services. This law has replaced many indirect tax laws that
previously existed in India.
GST is one indirect tax for the entire country. So, before Goods and Service Tax,
the pattern of tax levy was as follows:
Under the GST regime, the tax is levied at every point of sale. In the case of
intra-state sales, Central GST and State GST are charged. Inter-state sales are
chargeable to Integrated GST.
Now let us try to understand the definition of Goods and Service Tax –
“GST is a
comprehensive, multi-stage, destination-based tax that is levied on every value
addition.”
Multi-stage
There are multiple change-of-hands an item goes through along its supply chain:
from manufacture to final sale to the consumer. Let us consider the following
case:
1. Purchase of raw materials
2. Production or manufacture
3. Warehousing of finished goods
4. Sale to wholesaler
5. Sale of the product to the retailer
6. Sale to the end consumer
Goods and Services Tax is levied on each of these stages which makes it a multi-
stage tax.
Value Addition

The manufacturer who makes biscuits buys flour, sugar and other material. The
value of the inputs increases when the sugar and flour are mixed and baked into
biscuits. The manufacturer then sells the biscuits to the warehousing agent who
packs large quantities of biscuits and labels it. That is another addition of value
after which the warehouse sells it to the retailer. The retailer packages the
biscuits in smaller quantities and invests in the marketing of the biscuits thus
increasing its value.
GST is levied on these value additions i.e. the monetary value added at each
stage to achieve the final sale to the end customer.

Destination Base
Consider goods manufactured in Maharashtra and are sold to the final consumer
in Karnataka. Since Goods & Service Tax is levied at the point of consumption.
So, the entire tax revenue will go to Karnataka and not Maharashtra.

Journey of GST in India

The GST journey began in the year 2000 when a committee was set up to draft
law. It took 17 years from then for the Law to evolve. In 2017 the GST Bill was
passed in the Lok Sabha and Rajya Sabha. On 1st July 2017 GST Law came
into force.
What are the components of GST?
There are 3 taxes applicable under this system: CGST, SGST & IGST.
1. CGST: Collected by the Central Government on an intra-state sale (E.g.:
transaction happening within Maharashtra
2. SGST: Collected by the State Government on an intra-state sale (E.g.:
transaction happening within Maharashtra)
3. IGST: Collected by the Central Government for inter-state sale (E.g.:
Maharashtra to Tamil Nadu)

What changes has GST brought in?

In the pre-GST regime, every purchaser including the final consumer paid tax
on tax. This tax on tax is called Cascading Effect of Taxes. GST has removed
this cascading effect as the tax is calculated only on the value-addition at each
stage of the transfer of ownership.
1. SGST: Collected by the State Government on an intra-state sale (E.g.:
transaction happening within Maharashtra)
2. IGST: Collected by the Central Government for inter-state sale (E.g.:
Maharashtra to Tamil Nadu)

What changes has GST brought in?

In the pre-GST regime, every purchaser including the final consumer paid tax
on tax. This tax on tax is called Cascading Effect of Taxes. GST has removed
this cascading effect as the tax is calculated only on the value-addition at each
stage of the transfer of ownership.
1.2 SIGNIFICANCE OF TOPIC

GST has mainly removed the Cascading effect on the sale of goods and

services. Removal of cascading effect has impacted the cost of goods. Since the

GST regime eliminates the tax on tax, the cost of goods decreases. GST is also

mainly technologically driven. All activities like registration, return filing,

application for refund and response to notice needs to be done online on the

GST Portal; this accelerates the processes.

Removing cascading tax effect.

1 .Higher threshold for registration.

2. Lesser compliances.

3. Composition scheme for small business.

4. Online simple procedure for GST

5. Defined treatment for e-commerce.

6. Regulating the unorganised sector.

7. Increased efficiency in logistics.

 CHAPTER II – LITERATURE REVIEW

2.1 Richa Verma (July 2014)

In their research of “Goods and Service Tax- Panacea for indirect tax system in
India” they havesuggested that government in India is positive towards
implementation of GST. The objective of the study was to enquire the impact of
GST after its implementation. Their study was based on the secondary data
source. It has implied that merging of various taxes under one has led to
simplicity of tax system. It proved to be beneficial to the Central government,
State government as well as to the consumer in the long term. They concluded
that GST must be backed by strong IT infrastructure for getting long term gain
due to expensive software and complicated procedure.

2.2 Nitin Kumar (2014)

In his study “Goods and Service Tax-A Way Forward”-concluded that
implementation of GST in India help in removing the economic distortion by
Current Indirect Tax system and we have seen that total 160 countries have GST
as their Indirect Tax System and it is successful in some countries and in some
countries it is working or developing. GST encourage unbiased tax structure
which is indifferent to geographical locations. It was seen in previous tax
system that all the states have their own and different tax rates, which may be
the reason for Tax Evasion. So,GST may help in reducing Tax Evasion and
economic distortion.

2.3 MONNIKA GUPTA AND UPASANA HANDA (2016)

In the research, “GST in India” examined the consumption and production of
goods and services is increasing due to the implementation of GST. Another
objective is to know the need for GST in India. The study is based on the
secondary data sources and for measuring the performance bar diagrams and
various financial ratios were used. The study has revealed that there are less
chances of tax evasion. A study concluded that GST is a simpler, user friendly,
transparent tax system.

2.4 NISHITA GUPTA PROFESSOR (2015)

In her study sheconcluded that tax policy plays an important role on the
economy through their impact on both efficiency and equity. A good tax system
should keep in views issues of income distribution and at the same time also
endeavor to generate tax revenue to supportgovernment expenditure on public
services and infrastructure activities.
 CHAPTER III – OBJECTIVES OF TOPIC

3.1 OBJECTIVES

 To find out how gst work in small businessess.

 To highlight the benefits associated with the implementation of GST.

 To know the changes in the level of price after implementation of GST.

 To find out the impact of GST on sales of seller.

 To provide a conceptual framework of GST and its salient features

 To study of Challenges and opportunities of small businesses

 CHAPTER IV – RESEARCH OF METHODOLOGY

Fundamental Changes of the GST Regime

The basic impact of the GST laws on small businesses can be understood more
easily if we know the exact changes that this new law brought forward:

Single tax system :

Instead of levying various different charges, GST brought forward the
concept of single tax system for all supplies of goods and services within India.

Dual Tax Structure :

There are two different types of GST categories Central GST (CGST) and
State GST (SGST) applicable when trade is within one state.

Integrated Tax :
On inter state supplies, ie.., supply of goods or services from one state to
another, the IGST is applicable. This integrated tax is collected by the central
government and distributed within the states later.

Tax Rate Slabs :

The new laws also came with amendments to various tax rates. Different
goods and services are bracketed in different categories of GST tax rates.
Moreover, certain essential items are free from GST and luxury items have
additional GST.
 • How GST Works for Small Businesses?

GST (Goods and Services Tax) is the tax that simplifies taxation for small
businesses in India. It consolidates all taxes into a central tax system, and
specifically, greatly simplifies tax payment and administration. Small firms can
leverage from the higher efficiency and transparency in taxation regime. They
need to register under GST if their annual turnover exceeds the threshold limit,
i.e.Rs. 40 lakhs for goods and Rs. 20 lakhs for services.

GST tax rate differentiates from one type of goods to another irrespective of
service while most small businesses fall under the lower tax slabs. Compliance
involves filing regular returns and maintaining proper documentation to ensure
smooth operations within the GST framework.

• How Can Startups Make the Accounting Process More

Easier?

Generate Invoices:
Startups can bill their customers in a timely manner, track the payments and
generate accurate invoices with the help of the best GST accounting software

Manage Receivables and Payables:

Efficient management of accounts receivable and accounts payable will ensure a
startup having strong cash flow, and pay close attention to outstanding payment,
and good at prioritizing financial obligation.

Connect with CAs to Manage Accounting Via Cloud:

Through cloud-based account platforms we collaborate with CAs which help in
simplifying financial reporting, ensuring compliance and providing expert
advisory for sound business decisions.
 Efficient Inventory Management & Compliance Integration:
Startups are able to take advantage of inventory management integration with the
compliance processes in the delivery of accurate records, where their taxing
reporting and abidance of the regulations are streamlined.

If a startup's annual sales falls below the threshold of Rs. 40 lakhs for goods and
Rs. 20 lakhs for services, or if the startup is involved in the supply of exempt
items or services, it is not subject to GST.

If a startup's yearly turnover surpasses a certain threshold or if it engages in

interstate supply, e-commerce, or reverse charge mechanisms, then it must file
for GST.

Under the Startup India initiative, startups that are approved by the DPIIT and
fulfill the requirements for tax benefits are eligible to receive tax exemptions.
These consist of an exemption from long-term capital gains tax, a three-year tax
vacation, and taxation on investments that are worth more than their fair market
value.
 Opportunities created by GST for small business
Aside from bringing in new challenges, the GST regime has also brought a lot of
positive changes for small businesses. This opens new gateways for small
business owners to grow. Let’s see how:

Reduced Compliance Burden

The previous regime of state specific taxes used to put a lot of unnecessary
restrictions on the sale of goods and services. The new regime reduces these
burdens for separate filings, etc.

Level Playing Field

By eliminating the cascading effect of taxes, the GST regime creates a level
playing field for various business owners. As a result, the small businesses get an
equal chance at growth with healthy competition in the market.

Input Tax Credit Claim (ITC)

When business owners purchase a raw material or any ancillary product, they
pay taxes on the purchase. However, these are reimbursed to them as an ITC when
the products are sold. This is a good way to reduce tax liability and overcome the
cascading effect of the previous tax regime.

Transparency and Efficiency

With a very transparent regulatory system, GST eradicates the chances of
corruption or any hidden costs for business owners. This gives a clear idea to
small business owners about their duties towards GST compliance. Moreover, the
government constantly takes measures to make the GST implementation process
more effective. Resultantly, it impacts small businesses positively by giving a fair
chance.

Faster movement of goods

In the old regime, Octroi charges and inter-state checkposts, etc., took up a lot of
time in the delivery of goods. However, with all of those regulations eliminated,
an interstate transaction of goods can happen easily. Hence, with the reduced
timeline for delivery and costs, GST provides small businesses to try out the
interstate supply of goods.

Warehouse Optimisation
When the complexities are removed, small businesses get a chance to manage
their warehouses more effectively. Under the GST regime, these business owners
can also consolidate their warehouse functions at a national level and get major
benefits like cost and time savings.
 • GST Composition Scheme
Specifically for small businesses, the government has initiated the GST
composition scheme (“Scheme”). Under this scheme, a simplified tax compliance
process is given for small business owners, whose turnover is less than Rs. 1
crore. As a result, the burden of filing taxes is reduced, as the authorities eliminate
a lot of unnecessary requirements for these small business owners. Under this
scheme even the tax rates applicable are lower as compared to a regular GST
registration.

• Formalization of Business
Many small businesses are scattered. By obtaining GST registration, these
business owners can easily formalise their business. Moreover, they can also
obtain the benefit of various initiatives taken by the government. When a small
business is compliant with the tax regulations it can easily access financial credits
like loans and raising funds. Thus, creating new ways for expansion.

1. Basic Threshold Limit for goods and services helping MSMEs.

With GST in place, the Micro Small and Medium Enterprises (MSMEs) got lot
of benefits in terms of compliance reliefs in the form of “threshold exemptions”,
“Composition levy schemes”, “Quarterly filing of the GST returns” to mention a
few. In a major relief to MSMEs, the GST Council doubled the tax exemption
limit to Rs. 40 lakh in annual revenue. Similarly, the turnover limit for businesses
availing of the GST composition scheme, which allows them to pay tax on goods
and services at a flat rate, was raised to Rs.1.5 crore. The move aims to allay the
concerns of small traders. For north-eastern and hilly states, the GST exemption
limit has been doubled to Rs.20 lakh. However, even though the current threshold
limit has been increased as above, some of the MSMEs may still want to be part
of the GST chain, while some may actually opt for composition scheme. The
move to raise the threshold for GST registration is significant, as it would help the
MSMEs who had been badly hit by various problems like demonetization, and
business disruption in the early days of GST implementation and credit squeezes
etc. Bringing about major changes in the composition scheme, the turnover limit
for goods was raised to Rs. 1.5 crore from Rs. 1 crore which will also benefit the
Service providers with a turnover limit of up to Rs. 50 lakh to avail of the
composition scheme as well at a rate of 6%.
 The composition scheme allows MSMEs to do away with tedious tax filing
formalities and pay GST at a flat rate. Businesses registered under the
composition scheme are required to pay GST at 1% to 6% depending on the type
of business activity conducted by the registered person/business entity.

2. High Compliance burden on the MSMEs. After the initial

bumpy ride, MSMEs,

who had faced problems with GST compliance and cash flows, are gradually
settling down and adapting to the new indirect tax regime. A few MSMEs have
confirmed that the procedures of GST are getting easier day by day. The
uncertainty over input tax credit had been a dampener for quite some time for
MSMEs as it impacted their cash flow, but the proposed simplified return filing
system is expected to make the input tax credit flow smoother. Initially, MSMEs
faced problems with GST compliance and had to make certain modifications in
their systems. Further, a number of small taxpayers have opted for composition
registration wherein they have to pay tax at a specified percentage of their
turnover. G TAX BULLETIN APRIL, 2020 VOLUME - 61 - THE INSTITUTE
OF COST ACCOUNTANTS OF INDIA 2 Another issue bothering the MSMEs is
the continuous monitoring being done by authorities/departments of their monthly
transactions with a view to ensure that no activity has escaped the ambit of
compliance. Similarly, the lack of a timely disposal of refunds had impacted the
cash flow for exporters of both goods and service. MSME segment exporters had
been affected due to the blockage of working capital. "However, the new fully
electronic refund process system announced under Circular No. 125/44/2019 –
GST, has ensured that the input tax credit is made available to the buyer on
accepting the invoices uploaded by the supplier. This introduction of electronic
refund process should immensely benefit the MSMEs. Further, since GST
demands high automation of business processes, the MSMEs had to spend
enormous amount of time, money and energy on development and maintenance of
IT infrastructure. The introduction of a single quarterly return for MSME sector
has reduced the compliance burden and the MSMEs can now focus on business
development and growth instead of compliance aspects.
 3. Adverse impact of Taxation under reverse charge for un-registered
taxable persons

Unlike forward charge where the supplier of goods or services pays the tax on
supply, in case of Reverse Charge, the receiver becomes liable to pay the tax, i.e.,
the chargeability gets reversed. This means that the GST will have to be paid
directly by the receiver to the Government instead of the supplier. The registered
dealer who has to pay GST under reverse charge has to do self-invoicing for the
purchases made. For Interstate purchases the buyer has to pay IGST and for Intra-
state purchases CGST and SGST has to be paid under RCM by the purchaser.
Also, under Section 24 of CGST Act – Compulsory registration in certain cases -
all taxpayers required to pay tax under reverse charge have to register under GST
irrespective of the threshold limit applicable to them. Thus, if any goods or
services are supplied by a person who is unregistered and supplied to a registered
person, then GST needs to be paid by the registered person under reverse charge
as a recipient. Further, if any MSME who does not take registration under GST
and claims the basic exemption threshold, then the person receiving goods or
services from such MSMEs need to pay GST under reverse charge mechanism.
The above provision of RCM has a very high negative impact, since businesses
would definitely not prefer to deal with any unregistered persons and to take the
additional burden of compliance under reverse charge mechanism. Therefore, this
provision directly impacts the business of MSME Sector negatively and virtually
forces them to either register or shut the businesses which anyhow is not the
intention of the law makers.

4. Return of Goods sent on sale on approval basis and time limit thereof.

Sale on Approval is a business arrangement wherein an individual or company

who is interested in purchasing a specific item is allowed to use the item for a
given length of time. At the end of that time, if the individual is satisfied with the
item, they agree to purchase it. However, if the individual is unsatisfied for any
reason, they are allowed to return the item and are not committed to purchasing it.
Unlike “consignment sales”, “sales on approval” basis is not deemed as supplies
under GST. Hence, the principal can send the goods to the agent by issuing a
delivery challan instead of a tax invoice, and without charging GST on the same.
Once the goods are sold by the agent to the end customer, it implies that the agent
has accepted the goods received on approval. Once this sale has been ratified by
the agent, the principal can then issue the tax invoice, and charge GST. The agent,
at his end, can collect the purchase invoice, and avail the input tax credit on the
GST paid while filing his returns and paying the output GST liability to the
government. A tax invoice should be issued for Sale on Approval before or at the
time of supply OR6 months from the date of removal of goods from
factory/godown. If the goods are not approved within 6 months or if the agent has
not ratified any sales within 6 months, it will be deemed that sales of the said
goods has taken place and a tax invoice will need to be raised by the principal. If
the Goods are returned within 6 months, for those goods, which have been sent on
an approval basis but are returned or rejected within a maximum of period of six
months, no tax will be payable, subject to an extension of maximum of 2 months
by the Commissioner on merit. Under GST, the maximum time limit for the return
of goods sent on sale or return basis is 6 months and if the same is not approved
within the said time limit then an invoice needs to be issued and the goods shall be
deemed to have been supplied. In case of various MSMEs, the norms are to send
goods to Consignment Sales Agents (CSA) and customers on a “sale or return”
basis. However, putting a time-limit on return of goods would have negative
impact on such sectors. Therefore, to help such MSMEs it is suggested to remove
this provision and continue with the practice of paying GST only when actual
supply takes place.

6. Tax on Advances

Generally, GST is imposed on a supplier of goods and service at the time of

receipt of payment. However, in some cases, an advance payment is first made to
the supplier by the recipient of the goods or/and service or both. When a payment
is made ahead of its actual schedule such payment is also termed as advance
payment. In addition to this, sometimes the supplier of the goods and service
demands an advance payment as a safeguard against non-payment, or to cover its
costs for supplying a product or rendering of a service. As mentioned above
advances received against supply of goods and/or services are taxable in GST
regime. Collection of GST on advances would be cumbersome and requires high
compliance and tracking. Moreover, it is possible that advance may have been
received for intra-state as well as inter-state supplies of goods and services and
attracting multiple rates and, therefore, the possibility of paying incorrect tax or
determining incorrect place of supply. Further, in certain business, advances
would be received for multiple supplies and in such circumstances individual
identification of advances and matching of the same with the corresponding
supply for determining rate and place of supply shall be an additional burden.
Therefore, with the limited technological advent and resources in a MSME sector,
compliance with the provision of GST on advances would be difficult and lead to
unnecessary non-compliances. Therefore, it is suggested to allow the MSME
sector to pay GST only on invoice basis which would ease the compliance and
cash flow burden of MSMEs. TAX BULLETIN APRIL, 2020 VOLUME - 61 -
THE INSTITUTE OF COST ACCOUNTANTS OF INDIA 4

7. Payment and filing of return for availing input tax credit:

Once invoice is issued by a supplier under Section-31 with applicable tax
reflected on it, anonerous burden is being cast on recipient to prove tax has been
deposited by the supplier. The condition of tax to be deposited by the supplier to
the credit of appropriate Government in order to enable the purchaser to avail the
input tax credit on such supply made may cause undue hardship to the assesses. It
is suggested that the pre-conditions relating to payment of tax to the credit of
Government and mandatory filing of return be deleted and the same must be
reconsidered and liberalized to enable the MSMEs to avail input tax credit of tax
paid by them as was prevailing in case of CENVAT credit rules wherein credit
can be taken immediately on receipt of goods/ receipt of invoice. Alternatively, if
a supplier has accepted the liability of such taxes and has also disclosed the same
in his statement of outward supply, the credit must be made eligible to the
recipient irrespective the payment by the supplier to the credit of government. Or
else, if the Government believes that certain taxable persons in the unorganized
sector may not deposit the collected tax to Government, the concept of reverse
charge can be made applicable to them instead of denying/ delaying the credit
based on the non-compliance by other party to the contract.

8. Determination of Place of Supply and the type of taxes.

Under GST 3 types of taxes can be charged in the invoice. SGST and CGST in case of an
intra-state transaction and IGST in case of an interstate transaction. But deciding whether a
particular transaction is interstate or intrastate is not an easy task. Hence Time, place, and value
of supply important under GST. Time of supply means the point in time when goods/services
are considered supplied’. When the seller knows the ‘time’, it helps him identify due date for
payment of taxes. Usually, in case of goods, the place of supply is where the goods are
delivered. So, the place of supply of goods is the place where the ownership of goods changes.
If there is no movement of goods, the place of supply is the location of goods at the time of
delivery to the recipient. Generally, the place of supply of services is the location of the service
recipient. In cases where the services are provided to an unregistered dealer and their location is
not available the location of service provider will be the place of provision of service. Value of
supply means the money that a seller would want to collect the goods and services supplied.
The amount collected by the seller from the buyer is the value of supply. Since, GST is a
destination-based consumption tax, wherein taxes would accrue to the destination state,
Government has provided provisions for determining the place of supply in various situations.
Hence under GST, small businesses have to identify place of supply for each of their
transactions and accordingly GST needs to be paid to the credit of respective governments
which shall be a cumbersome task. Further, in case the place of supply is not correctly
determined then tax needs to be again paid to correct government and the taxes paid earlier
needs to be claimed as refund. It is suggested that law be amended so that in case tax is wrongly
paid to incorrect government, then instead of again paying the tax and applying for refund, such
government can itself do an inter-governmental settlement which shall ease the taxation law.
 • Relationship between GST rates and pricing :-
The relationship between GST rates and pricing can be understood as a
consumer's perceived value or satisfaction with a product or service. Utility
measures the happiness or satisfaction gained from consuming a good or
service. When GST rates rise, the price of a product or service often increases,
potentially reducing its utility for the consumer, especially if they perceive it as
less valuable at a higher price.

On the other hand, if GST rates decrease and prices drop, the utility derived
from the product or service might increase as consumers feel they are getting
better value for their money. However, it's worth noting that utility is subjective
and varies among individuals. While some might be deterred by a price increase
due to higher GST, others might still find the utility of the product or service
worth the cost.

• Relationship between GST rates and profit margins :-

The relationship between Goods and Services Tax (GST) rates and profit
margins for small businesses is intricate and multifaceted. GST, a value-added
tax, is levied on the supply of goods and services, and its rate can directly
impact the cost structure of a business.

When GST rates are high, the end consumer's cost of goods or services can
increase, potentially reducing demand. For small businesses operating on thin
profit margins, any decrease in sales volume due to high GST rates can
significantly affect profitability. Conversely, if GST rates are lowered, it can
make products or services more affordable for consumers, potentially boosting
sales and benefiting businesses with increased revenue.

However, it's essential to note that while reduced GST rates can lead to
increased sales, they also mean a lower tax revenue for the business, which they
might have used as input tax credit against their liabilities. Additionally,
frequent changes in GST rates can lead to uncertainties, making it challenging
for small businesses to forecast profits and plan for the future.
 CHAPTER NO V - BENEFITS OF GST FOR SMALL
BUSINESSES AND STARTUPS IN INDIA

1. IMPROVED TAXATION SYSTEM WITH GREATER

TRANSPARENCY & MINIMAL CORRUPTION

With The New Goods And Services Tax System, Things Like Multiple Taxes,
Offline Registration, And Other Tax Oddities Are No Longer Allowed. The New
Tax System Is Now More Open Because Of This. So, Taxpayers Shouldn't Expect
People To Look At Or Change Their Tax Returns If They Don't Need To.

Everyone Knows How Hard It Was For Taxpayers To Explain To Many Tax
Officials, From Vat, Excise, And Cst To Many Other Departments, How
Complicated Their Transactions Were.

A Complicated Tax System Also Made It More Likely That There Would Be A
Lot Of Corruption, Which Was A Big Problem For Business Owners. The Gst Has
Fixed Many Problems By Making The Process Online And Paperless. This Helps
New Businesses Avoid Corruption And Complicated Tax Filing Processes.

2. IMPROVED LOGISTICS EFFICIENCY.

Before The Government Implemented The New GST System, Each State
Government Had Its Octroi And CST Tax Structure For Goods Transported
Between States. So, Implementing GST By The Central Government In India Can
Be Seen As A Masterstroke And A Good Thing For Startups.

The GST Has Replaced The Octroi, CST And Several Other Major Taxes In
Different States, And The Tax On Moving Goods And Services Between States
Has Been Cut Significantly. Because Taxes Have Gone Down, Logistics Costs For
Startups Have Also Gone Down, Making It Easier For Them To Ship Products
Across State Lines.
 3. COMPLIANCE COST REDUCTION

By Combining Various Taxes Into A Single Tax, The Government Has

Dramatically Decreased The Complexity Of Enterprise Tax Reporting. Startup
Enterprises And Entrepreneurs Are No Longer Required To Visit Multiple Tax
Agencies To File Their Tax Filings Correctly.

Although It Is Still Challenging For New Enterprises To Understand The Dynamic

Regulations Of The New Gst System, Everyone Will Eventually Be Able To
Remain Gst Compliant.

4. IT'S EASIER TO START A NEW BUSINESS.

With GST Registration, It Is Easier Than Ever To Start A Business. Now, Startups
Don't Have To Follow Different Tax Rules In Each State Where They Do
Business. Through GST Registration, New Businesses Can Do Business
Anywhere In The Country Without Problems. This Also Eliminates The High Fees
Needed Because Of The Different Tax Rules In Each State.

5. BETTER OPPORTUNITIES FOR BUSINESS

SCALABILITY AND EXPANSION

Before The New GST System, Many New Businesses And Startups Had To Keep
Their Operations In A Single State. It Was To Avoid The Problems Of Doing
Business Differently And Saving Money On Taxes. This Has Made It Much
Harder For Small Businesses To Grow And Shrink Their Entire Client/Customer
Base.

With GST, Small Businesses That Sell Their Products In Other States No Longer
Have To File Multiple GST Registrations. It Lets Them Reach Out To A Wider
Range Of Customers. But If A Business Has Sub-Branches Or Offices In More
Than One State, It Needs To Sign Up For GST In Each State Separately.
 6. BUSINESS-FRIENDLY TAX

For Accurate And Straightforward Administration, A Business-Friendly Tax

Policy Is Required. It Is Expected That The Gst Will Address This Issue To
Promote The Development And Expansion Of Startups In The Country.

A New Entrepreneur Must Be Free Of Taxation, Disagreements, And Difficulties

While Starting A Business. Given The Importance Of These Procedures And
Regulations, They Must Be Implemented At The Ground Level.

7. ENJOY TAX CREDIT ON THE PURCHASE.

In India, Many New Businesses Are In The Service Industry. Before Gst, They
Had To Charge And Pay The Government A Service Tax. One Of The Big
Concerns Was That It Would Not Use The Vat Paid On Purchases Made For
Business Purposes. There Was No Way To Get A Credit For The State Vat Paid
That Could Be Used To Pay Off The Service Tax Bill.

Since Gst Now Covers Several Indirect Taxes, The Problem Has Been Solved.
Under Gst, A Startup Can Deduct The Tax It Paid On Purchases (Like Office
Supplies) From The Tax It Paid On Sales.

8. GST COMPOSITION SCHEMES FOR STARTUPS AND

NEW BUSINESSES

The New Tax System, GST, Has An Optional GST Composition Scheme That
Lets Startups And Small Businesses With Annual Sales Of Up To Rs.1 Crore Pay
Less Tax. This Will Reduce The Burden Of Taxes Right Away, Even Though
They Are Still In Their Early Stages. In The Old Tax System, The Limit For
Service Tax Was Rs 10 Lakhs.

But The Limit For VAT Varies From State To State, From Rs 5 Lakhs To Rs 10
Lakhs. With GST, However, The Limit Has Been Raised To Rs 20 Lakhs (Rs 10
Lakhs In The Case Of North East And The Hill States). Businesses That Make
Less Than Rs 1 Crore A Year Can Pay Less For Their Composition Plan Levy.As
A Result, The Assistance Of The GST Has Favourably Overstated Various
Regions Of The Indian Economy. GST Provides Advantages Depending On The
Industry You Work In. GST Is At Minimal Register Expenses That Can Profit The
Indian Budget In The Long Run.

1. How do you file your GST return?

TABLE 01

OPTION ANSWER FREQUENCY PERCENTAGE

A BY YOURSELF 20 29%

B BY CA 40 57%

C BY OTHERS 10 14%
EXPERTS

TOTAL 70 100%

CHART 16

A BY YOURSELF

14% B BY CA

29% C BY OTHERS

CHART 16, represents the methods by which sellers file their GST return.

Here it can be seen that, among 70 sellers, 29% file it by themselves. 57% get fill it by a CA
and remaining 14% fill it by some other experts.
 2. Comparing to previous tax system, what do you think about GST?

TABLE 2

OPTION ANSWER FREQUENCY PERCENTAGE

A REQUIRE 13 19%
EXPENSIVE
SOFTWARE
B COMPLICATED 10 14%
PROCEDURE
C REQUIRE 21 30%
SPECIAL
KNOWLEDGE
D ALL OF THE 26 37%
AVOVE
TOTAL 70 100%

CHART 2

A REQUIRE EXPENSIVE SOFTWARE

B COMPLICATED PROCEDURE

19% C REQUIRE SPECIAL KNOWLEDGE

37%

14%

CHART 2 , represents the opinion of respondents regarding GST

Here it can be seen that, out of 70 respondents, 19% of respondents think GST required
expensive software. 14% thinks it has very complicated procedure to be performed. 21%
think it requires special knowledge while remaining 37% have all the opinion mentioned
above.
 3. After implementation of GST-

TABLE 3

OPTION ANSWER FREQUENCY PERCENTAGE

A BLACK MONEY 25 36%

HAS REDUCED
B CORRUPTION 12 17%
HAS REDUCED
C HIGH PRICE 15 21%
COST
D NONE OF THE 18 26%
ABOVE
TOTAL 70 100%

CHART 3

A BLACK MONEY HAS REDUCED

B CORRUPTION HAS REDUCED

26% C HIGH PRICE COST

36%

CHART 3, represents the impact of GST after its implementation.

Here it can be seen that, out of 70 respondents, 36% of respondents think that after GST
black money has reduced. 17% of them think it has reduced the corruption. 21% thinks it has
led to high price cost. While remaining 26% doesn’t agree to above-mentioned option.
 4. Are you satisfied with the classification of goods in four basic slabs of
5%, 12%, 18% and 25%?
TABLE 4

OPTION ANSWER FREQUENCY PERCENTAGE

A HIGHLY SATISFIED 1 1%

B SATISFIED 31 44%
C NEUTRAL 28 40%
D DISSATISFIED 7 10%
E HIGHLY DISSATISFIED 3 5%
TOTAL 70 100%

CHART 4

4%2%
10% A HIGHLY SATISFIED

B SATISFIED
44%
C NEUTRAL

40% D DISSATISFIED

CHART 19, represents the satisfaction level of respondents regarding classification of goods
in four basic slabs of 5%, 12%, 18% and 25%.

Here it can be seen that, among 70 respondents, only 1% are highly satisfied with these
classification. 44% are satisfied with it. 40% of respondents have neutral opinion regarding it.
10% are dissatisfied while 5% are highly dissatisfied with it.
 5. Do you think GST supports "Digital India" campaign?

TABLE 5

OPTION ANSWER FREQUENCY PERCENTAGE

A YES 32 46%

B NO 9 13%

C MAYBE 29 41%

TOTAL 70 100%

CHART 5

A YES
41%
46%
B NO

C MAYBE

13%

CHART 5, represents the opinion of respondents’ about GST as a supporter of “Digital

India” campaign. Here it can be seen that, out of 70 respondents, 46% of the sellers agree to

it. Only 13% think it doesn’t support the campaign while remaining 41% are of Neutral

opinion.
• Negative impacts of GST rates and small business pricing :-
Learning the New System Costs Money: Adapting to GST meant businesses had to invest
in new software, training, and perhaps even hiring experts. These initial costs, necessary
for the transition, might temporarily increase product or service prices.

 Big companies might have an advantage:

Larger companies, with more resources and experts, might find it easier to adapt to
GST. Their ability to efficiently navigate the new system can allow them to price
products more competitively, making it challenging for smaller businesses to match.

 Prices might change often:

Businesses are still trying to understand the GST system. Because of this, they might
change their prices many times to see what works best. When prices change, it can
confuse people who want to buy things. They might need to be sure when is the best
time to buy or how much they should spend. This uncertainty can make it hard for
them to decide what to buy.

 Pricing bundles is tricky:

GST can complicate pricing for businesses that offer combined packages, like a
product with an added service. They need to carefully consider how to set prices for
these combinations to remain profitable while being fair to consumers.
• Open ended questions:
1 According to you, what is the benefit of GST?
ANALYSIS: Majority of the responses were that the GST has removed various
taxes that had previously occurred. GST has increased the transparency in tax
system and has reduced the tax evasion and black marketing to some extent.
GST is beneficial for the country because after its implementation government
has imposed on every businessman to show the maximum possible correct
details and has to pay the maximum possible tax which is levied on them.

2) According to you, what is the limitation of GST?

ANALYSIS: According to respondents, the major limitation of GST is its
complicated procedure and increased in cost due to software purchase. There is
a challenge for Small Business to adapt online system. Various slabs has made
the GST very complicated for sellers. Government is unable to provide
necessary information regarding the changes which has put the sellers in chaos.

3) What procedural change you would like to suggest for easy

implementation of GST?
ANALYSIS: According to respondents, the major changes that should be
implied are that there should be easy procedures for rectification of errors and
no such penal consequence for non-deliberated mistakes. Some of the Tax rates
should be low which comes under the normal use of regular people. There
should be change in reverse charge mechanism. Seminars should be organised
by government. Software should be provided at nominal rate.
 CHAPTER VI

6 .1 FINDINGS :

1. It is found that majority of the respondents have average sales below 20 Lakhs

2. It is found that 50% of the respondents have positive impact of GST in their
business.
3. It can be seen that majority of the respondents are of the opinion that price
level of their product has increased after the implementation of GST.
4. Half of the respondents have a positive view that GST gas reduced the tax
evasion.
5. It if found that majority of the respondents have rated GST as a "GOOD" tax
system.
6. There is neutral effect of GST regarding overall benefit to the sellers.

7. It is found that most of the sellers have neutral opinion about the
variations in the GST rates on their product while 29% are satisfied with these
variations.
8. It is found that more than half of the respondent think that GST has
increased the transparency in the tax system.
9. Around 40% of the respondents find procedure of filling GST return to be
moderate.
10. It is found that almost all the respondents are aware about the concept of
CGST, SGST and IGST.
12. It is found that there is no such one sided opinion to whether GST reduced
the cost burden on the customer. 32% thinks yes it has reduced while 38%
thinks it has not. Remaining 28% have neutral opinion about it.
13. It is found that 57% of the respondents agree that GST act as a source of
revenue for the government.
14. It is found that majority of the respondents consider GST over previous tax
system.
15. It is found that almost all the respondents are aware of the regular
amendments in the GST.
16. It is found that majority of the respondents file their GST return by CA.
17. It is found that majority of the respondents thinks GST requires
expensive software, special knowledge and has complicated procedure.
18. It is found that 35% of respondents thinks after GST black money has reduced.

19. It is found that majority of the respondents are satisfied or have neutral
opinion about the classification of goods in four basic slabs.
20. Majority of the respondents thinks that GST supports Digital India campaign.
 6.2 SUGGESTIONS

1. The public suggested that there should be a smooth, transparent a simple

transition provisions which is easily understandable.

2. Special focus on awareness and training of all officers, professionals and

assesses should be given on GST.

3. An expert panel should be formed to recommend modifications to the

Constitutions and it should be published for the mass public.

4. The public also are not well informed on the benefits of the GST. Therefore,
in order to ensure efficient implementation of the GST, the government should
come out with a proper guideline to the society on the procedures for the
implementation of GST.

5. 18% slab of GST should be reduced because it is much for middle class.

6. Quarterly returns are better instead of monthly returns.

7. There should be development of some software which can make the work easier.

8. Procedure for filling GST return should be made easier and submission of
unwanted documents could be removed.

9. Timely information should be provided with regard of regular amendments

happening in the GST.

10. There should be easy procedure for rectification of errors and no such penal
consequences for non-deliberated mistakes.
 6.3 CONCLUSION

The GST system is basically structured to simplify current Indirect tax system.

A well designed GST is an attractive method to get rid of deformation of the

existing process of multiple taxation. Under GST various indirect taxes are

subsumed and it would result in a simpler tax regime. GST brings the

transparency in the tax system. It is a business-friendly tax system as there is a

positive impact of GST on sellers and they feel that it is personally benefitted to

them. GST had reduced the corruption and solved the problem of tax evasion.

Not only business-friendly, it is also a consumer-friendly tax system as it

reduced the burden of cost on the customers. GST required special knowledge

for filing the return and also its procedure is very complicated so it should be

made easy for filing. It is a good option as it supports ‘Digital India’ campaign

and also it acts as a source of revenue for the government. It will allow India to

better negotiate its term in the international trade forums. This will make the

Indian market more stable than before and Indian companies can compete with

the foreign companies. While the GST provides certain advantages to the

MSMEs, the government may seriously look into the recommendations and

suggestion given above so that the matters can be resolved as soon as possible

for the benefit of all MSMEs. MSMEs can also highlight these issues to the law

makers, through its associations or various representative bodies or any specific

committees formed by Government for the development of MSME Sector.

• LIMITATION

During conduction of a research study, a researcher faces a lot of constraints

which makes that study full of difficulties for him. While some of these
constraints are partly or fully eliminated by the researcher, some constraints are
still intact & affects the study extraneously.

Likewise, I too faced these constraints while conducting the study on “A Study
on the Impact of sales level after GST” and due to it my study has following
limitations:

 The published data gathered for the study, have not been updated by
the relevant agencies on time. Hence, in some cases, latest data for the
study could not be gathered.
 The data collected is restricted to the age group of 16-30 years and
above as majority of the respondents were belonged to that group.
Therefore, the information is biased to that group only.
 Any subsequent change in the tax provision and rules by the government
may make the corresponding findings, suggestions redundant.
 The study is based on sample respondents and has the limitations of
having it scope restricted to the seller’s decision making. All the
information provided is from the view point of sellers only. Therefore,
this study can be viewed more from the perspective of sellers working in
India.
 It is not necessary that every respondent have full knowledge about the
topic, as GST is a complex subject of study, due to this the authenticity of
the study got affected by the answers of such type of respondent.
6.4 SCOPE FOR FUTURE RESEARCH

• This study opens up new grounds for further research. In this study, only sellers
were taken into consideration as respondents but in future research wholesal0ers
and retailers could be clubbed together.
• Further, studies can extend to the product categories and classes which may
lead to the Generalisation of the findings of the study.
• A similar study of this sort could be conducted for the consumers. This
might reveal thepossible difference in consumer responses for what they feel
about GST.

• Majority of the respondents answered that the procedure for filing GST return
is quite complicated. Further studies could be conducted to find the reasons for
the complications for filing returns and what other problems faced by the sellers
while filing GST return.
• In this study, an overview of sellers were taken. A separate study could be
conducted to know the impact of GST on goods and services separat