“Impact of GST Implementation on Small Businesses”

Submitted to
Vaishnavi Radheshyam Malpani

Shri Muktanand College, Gangapur

Chhatrapati Sambhajinagar (M.S.)

For the Award of the Degree of

Master of Commerce
in
COMMERCE
Under the Faculty of Commerce & Management

Research Student
Vaishnavi Radheshyam Malpani

Under the Guidance of

Dr Ankush Padale
Shri Muktanand College, Gangapur
Dist. Chh. Sambhajinagar

2025
 Acknowledgment

This Project is the culmination of years of dedication, research, and guidance,

and I owe a great deal of gratitude to the many people who have supported me

throughout this journey.

First and foremost, I would like to express my deepest appreciation and gratitude to my

supervisor, Dr Ankush Padale, whose guidance, patience, and encouragement were

instrumental in shaping this research. Your invaluable insights and constant support

made this journey both enriching and rewarding.

I am also grateful to the faculty members of the Department of Commerce

at Shri Muktanand College, Gangapur Chhatrapati Sambhajinagar (M.S.)

for their academic support and the resources provided throughout my study.

Special thanks to my colleagues and friends for their invaluable discussions and moral

support.

I wish to thank the entrepreneurs who participated in this study for their

willingness to share their experiences and insights, which were crucial to the success of

this research.

Lastly, I am profoundly grateful to my family, whose unwavering support,

understanding, and sacrifices have been the backbone of my journey. To my parents,

Radheshyam , and to , your belief in me has been my greatest source of strength.

Thank you all for making this journey possible.

 Declaration

I, Vaishnavi Radheshyam Malpani, hereby declare that the Project

entitled " Impact of GST Implementation on Small Businesses” submitted to Shri

Muktanand College, Gangapur Chhatrapati Sambhajinagar (M.S.) for the award of the

degree of Master of Commerce (M.COM.) in Impact of GST Implementation on

Small Businesses is a record of original work carried out by me under the supervision

of Dr Ankush Padale This Project has not been submitted to any other university or

institution for the award of any degree or diploma.

I also declare that the thesis is my own work, and all sources of information have been

duly acknowledged.

[Your Signature]

[Your Name]

[Date]
 Certificate from the Supervisor

This is to certify that the thesis entitled "________________________" submitted by

Vaishnavi Radheshyam Malpani (Seat No: XXXXXXXX) in partial fulfillment of the

requirements for the award of the degree of Master of Commerce (M.COM) in [Impact

of GST Implementation on Small Businesses is a record of original research work

carried out by Vaishnavi Radheshyam Malpani under my supervision and guidance.

The results embodied in this thesis have not been submitted, in part or full, to any other

university or institution for the award of any degree or diploma.

Guide Name

Dr Ankush Padale

Commerce [University Name]

Date: [Date]
 Contents
Chapters
Particular Page No.
No.
Title page 1

Certificates 4

Declaration 3

Acknowledgement 2

Contents 5

List of Tables

List of Figure

1 Introduction

2 History of Indirect Taxes in India

3 GST Framework in India

4 Registration and Compliance

5 Impact on Different Sectors

6 Case Study: Shree Laxmi Traders

7 Survey and Data Analysis
8 Challenges in Implementation
9 Future Scope of GST
10 Findings and Suggestions
11 Conclusion
6|Page
12 Annexures
13 Bibliography
10 Findings and Suggestions
11 Conclusion
12 Annexures
13 Bibliography

7|Page
 Impact of GST
Implementation
on Small
Businesses

8|Page
What is GST? (Basic Definition)
1.1 Defining GST:

GST is an indirect tax. Explain the difference between direct and indirect taxes in
simple terms. (Direct taxes are paid directly by the person earning the income, like
income tax. Indirect taxes are paid through a seller when you buy something, like
GST).

GST is a comprehensive tax. It replaced many indirect taxes that existed before.

GST is levied on the supply of goods and services. The term "supply" is very
important in GST. Explain that it includes all kinds of sales, transfers, and exchanges.

GST is a destination-based tax. This means the tax revenue goes to the state where the
goods or services are consumed, not where they are produced. Use a simple example:
If a shirt is made in Gujarat but sold in Maharashtra, the GST revenue goes to
Maharashtra.

1.2 Key Features of GST:

One Nation, One Tax: Emphasize that GST aims to create a unified market in India
by having a single tax rate across the country.

Continuous Chain of Tax Credits: Explain how businesses can get credit for the GST
they pay on their purchases, which helps to avoid "tax on tax."

Broad Base: GST applies to most goods and services, with a few exceptions.

Dual GST: India has a dual GST system with the Central Government collecting
CGST and State Governments collecting SGST.

1.3 Types of GST:

CGST (Central Goods and Services Tax): Collected by the Central Government on
intra-state supplies (within the same state).

SGST (State Goods and Services Tax): Collected by the State Government on intra-
state supplies.

IGST (Integrated Goods and Services Tax): Collected by the Central Government on
inter-state supplies (between different states) and on imports.

UTGST (Union Territory Goods and Services Tax): Collected in Union Territories.
9|Page
Why was GST needed? (Problems with the old tax system

2.1 Cascading Effect of Taxes (Tax on Tax):

Explain with an example: A manufacturer pays excise duty on production, then a state
adds sales tax to the price (which includes the excise duty). This means tax is paid on
the excise duty, increasing the final price for the consumer.

Use a diagram to illustrate the cascading effect.

Explain how GST eliminates this by allowing input tax credit.

2.2 Complexity of the Pre-GST Regime:

Mention the various taxes that existed before GST:

Central Excise Duty

Service Tax

Value Added Tax (VAT)

Central Sales Tax (CST)

Octroi

Entertainment Tax

Entry Tax

Explain how each of these taxes had its own rules, rates, and compliance
requirements, making it very complicated for businesses.

Mention the different tax rates across different states.

2.3 Barriers to Interstate Trade:

Explain how CST was levied on inter-state sales, which created barriers to trade
between states.

Discuss the problems caused by octroi and entry tax, which were levied by local
authorities on goods entering their jurisdiction. This caused delays and increased
transportation costs.

2.4 Inefficiency and Lack of Transparency:

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 Explain how the old system led to inefficiencies in the supply chain due to the need to
comply with different tax laws in each state.

Discuss how the lack of transparency in the old system made it easier for tax evasion
to occur.

Benefits of GST (Simpler taxes, easier interstate trade, etc.)

3.1 Simplification of the Tax Structure:

Reiterate how GST replaced multiple taxes with a single tax, making it easier for
businesses to understand and comply with the tax laws.

Explain how this reduces the compliance burden for businesses and saves them time
and money.

3.2 Elimination of the Cascading Effect:

Explain again how input tax credit works under GST and how it eliminates the "tax
on tax" problem.

Use a numerical example to show how GST reduces the final price of goods
compared to the old system.

3.3 Common National Market:

Explain how GST has created a unified market in India by removing barriers to
interstate trade.

Discuss how this has made it easier for businesses to sell their products across the
country and has led to increased efficiency in the supply chain.

3.4 Increased Efficiency and Productivity:

Explain how GST has reduced transportation time and costs by eliminating octroi and
entry tax.

Discuss how this has led to increased efficiency and productivity for businesses.

3.5 Enhanced Government Revenue:

Explain how GST has broadened the tax base by bringing more businesses into the
tax net.

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 Discuss how this has led to increased government revenue, which can be used for
public services and development.

3.6 Reduction in Tax Evasion:

Explain how GST makes it harder to evade taxes because of the input tax credit
mechanism and the tracking of transactions.

How GST works in general (Value addition, input tax credit)

4.1 The Concept of Value Addition:

Explain with examples from different industries (manufacturing, retail, services) how
value is added at each stage of the supply chain.

Example (Manufacturing):

A company buys raw materials for Rs. 100 and adds value of Rs. 50 by
processing them. The value of the semi-finished goods is Rs. 150.

Another company buys the semi-finished goods for Rs. 150 and adds value
of Rs. 100 by further processing them. The value of the finished goods is Rs.
250

A retailer buys the finished goods for Rs. 250 and adds value of Rs. 50 by
selling them. The final price for the consumer is Rs. 300

Explain that GST is levied on this value addition at each stage.

4.2 Input Tax Credit (ITC) Mechanism:

Explain in detail how ITC works with a numerical example.

Example:

Manufacturer A buys raw materials for Rs. 100 + Rs. 18 (GST) = Rs. 118

Manufacturer A sells semi-finished goods for Rs. 150 + Rs. 27 (GST) = Rs.
177

Manufacturer A can claim ITC of Rs. 18 and only needs to pay Rs. 9 (Rs. 27
- Rs. 18) to the government.

Explain the conditions for claiming ITC.

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 Explain the importance of ITC in preventing the cascading effect.

4.3 GST Chain:

Illustrate the GST chain with a diagram showing the flow of goods, services, and tax
payments from the supplier to the consumer.

Show how ITC is passed along the chain.

Scope of the project (What you'll be covering in your research)

5.1 Focus on Small Businesses:

Clearly state that the project will focus on the impact of GST on small businesses.
Define what constitutes a "small business" in the context of GST (e.g., based on
turnover).

5.2 Research Objectives:

List the specific questions that the research will address:

How has GST affected the operational costs of small businesses?

What are the challenges faced by small businesses in GST compliance?

How has GST impacted the competitiveness of small businesses?

What are the perceptions of small business owners regarding the benefits
and drawbacks of GST?

5.3 Research Methodology:

Briefly mention the methods that will be used to collect data:

Surveys of small business owners

Interviews with small business owners

Case studies of selected small businesses

Analysis of secondary data (reports, articles, etc.)

5.4 Limitations of the Study:

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Acknowledge any limitations of the research, such as the sample size, geographical
area covered, or time frame.

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 2. History of Indirect Taxes in India
2.1 Pre-Independence Era

Ancient and Medieval Periods:

Land Revenue: Explain that in ancient India, the primary source of revenue for rulers was land tax
(like a tax on what farmers grew).

Trade Taxes: Describe how taxes were also levied on goods that were bought and sold in markets
and during trade.

Customs Duties: Mention that taxes were collected on goods coming in and going out of the
kingdom.

British Colonial Period:

Explain that the British introduced more structured tax systems.

Salt Tax: Briefly discuss the salt tax and its significance in India's history (e.g., the Salt March).

Other Levies: Mention other taxes imposed by the British, focusing on how they affected trade and
the economy.

2.2 Post-Independence Era

Early Tax Structure:

Explain that after independence, India continued with a system of indirect taxes, but changes were
made.

Focus on the growth of different types of taxes.

Key Indirect Taxes:

Sales Tax:

Explain that sales tax was levied by individual states on the sale of goods.

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Describe how sales tax rates varied from state to state.

Excise Duty:

Explain that excise duty was a tax levied by the central government on the production of goods
within the country.

Describe how excise duty was applied at the manufacturing stage.

Service Tax:

Explain that service tax was introduced later, levied by the central government on the provision of
services (like transportation, restaurants, etc.).

Describe the expansion of service tax over time.

Central Sales Tax (CST):

Explain that CST was levied by the central government on the sale of goods from one state to
another.

Describe how CST created problems for interstate trade.

Value Added Tax (VAT):

Explain that VAT was introduced by states to replace sales tax, and it was an improvement because
it reduced the cascading effect.

Describe how VAT worked on the principle of value addition.

Octroi and Entry Tax:

Explain that octroi was a tax levied by local bodies on goods entering their area, and entry tax was a
tax levied by states.

Describe how these taxes caused delays and increased transportation costs.

2.3 Problems with the Old System

Cascading Effect (Tax on Tax):

Explain in detail how the cascading effect increased the final price of goods.

Use examples to illustrate how this affected consumers and businesses.

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Show how it made Indian products less competitive.

Complex Tax Structure:

Elaborate on the multiplicity of taxes (central and state taxes) and the difficulties businesses faced in
complying with different laws.

Explain how this complexity led to higher administrative costs for businesses and the government.

Distortions in Trade and Commerce:

Explain how different tax rates in different states led to distortions in trade, with businesses setting
up operations in states with lower tax rates.

Describe how CST hindered the development of a unified national market.

Tax Evasion:

Explain how the complex system made it easier for businesses to evade taxes.

Discuss how the lack of a proper input tax credit mechanism contributed to tax evasion.

2.4 The Kelkar Task Force

Vijay Kelkar Committee:

Introduce the Kelkar Task Force, headed by Dr. Vijay Kelkar.

Explain that this committee was set up by the Indian government to recommend tax reforms.

Recommendations:

Explain that the Kelkar Task Force strongly recommended the implementation of GST.

Summarize the key reasons why the committee suggested GST.

Mention the benefits that the committee projected from GST implementation.

2.5 The Long Journey to GST

Initial Discussions:

Describe the early discussions and debates about GST in the Indian government and among
economists.

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Mention the initial proposals and the challenges in reaching a consensus.

Empowered Committee of State Finance Ministers:

Explain the role of the Empowered Committee in designing the GST model.

Describe the discussions and negotiations between the central and state governments.

Constitutional Amendments:

Explain the need for constitutional amendments to enable the implementation of GST.

Describe the process of passing the Constitution (101st Amendment) Act, 2016.

GST Council:

Explain the formation of the GST Council, which is the governing body of GST.

Describe the role of the GST Council in deciding tax rates, rules, and procedures.

Implementation:

Describe the final steps leading to the implementation of GST on July 1, 2017.

Mention the challenges faced during the transition to GST.

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3.1 Simplification of the Tax Structure

3.1.1 Replacing Multiple Taxes:

Before GST, there were many different taxes like excise duty, sales tax, service tax, and others. GST
combined many of these into one tax.

Imagine having to learn the rules of many different games versus learning just one set of rules. GST
is like learning one set of rules, making it much simpler!

3.1.2 Easier Compliance:

Businesses now have to file fewer tax returns. Earlier, they had to file different returns for each tax.

This saves businesses time and money, as they don't need to spend as much on paperwork and
accountants.

3.1.3 Reduction in Complexity:

The old tax system was very complex, with different rules in different states. GST has made the
rules more uniform across the country.

This makes it easier for businesses to operate in different states.

3.2 Elimination of the Cascading Effect

3.2.1 What is Cascading Effect?

It's like paying tax on tax. For example, a manufacturer pays tax on the cost of production. Then,
when the goods are sold, sales tax is charged on the price, which already includes the production tax.

GST solves this problem by allowing businesses to claim credit for the tax they've already paid on
their inputs (raw materials, etc.). This is called Input Tax Credit (ITC).

3.2.2 How GST Eliminates Cascading Effect:

Under GST, a business can deduct the GST paid on purchases from the GST collected on sales.

This ensures that tax is paid only on the value added at each stage of the supply chain, not on the tax
paid earlier.

3.2.3 Example:

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Let's say a shirt manufacturer buys cotton for ₹100 and pays ₹5 GST on it.

The manufacturer makes a shirt and sells it for ₹200, charging ₹10 GST.

The manufacturer can claim a credit of ₹5 (the GST paid on cotton) and only needs to pay ₹5 (₹10 -
₹5) to the government.

Without GST, the tax would have been calculated on the full ₹200, including the tax paid on the
cotton.

3.3 Common National Market

3.3.1 Unified Market:

GST has created a single market across India. Before GST, different states had different tax rates,
which made it difficult for businesses to sell goods across state borders.

Now, with GST, tax rates are more or less the same across the country, making it easier for
businesses to trade.

3.3.2 Free Flow of Goods:

The removal of taxes like octroi and entry tax has made it faster and cheaper to transport goods
across states.

This has improved the efficiency of the supply chain and reduced transportation costs.

3.3.3 Increased Trade:

The common national market has led to an increase in trade between states, benefiting both
businesses and consumers.

Businesses can now reach a wider market, and consumers have access to a greater variety of goods.

3.4 More Transparency

3.4.1 Clear Tax Calculation:

GST makes it very clear how much tax is being charged on goods and services. The tax is shown
separately on the invoice.

This makes it easier for consumers to know exactly how much tax they are paying.

3.4.2 Input Tax Credit:

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The ITC mechanism ensures that every transaction is recorded, making it easier to track the flow of
goods and services.

This reduces the scope for tax evasion and increases transparency in the tax system.

3.4.3 Accountability:

With GST, businesses are more accountable for the taxes they collect and pay.

The online system for filing returns makes it easier for the government to track transactions and
ensure compliance.

3.5 Helps Prevent Tax Cheating

3.5.1 Reduced Tax Evasion:

The design of GST, with its emphasis on ITC, makes it harder to evade taxes.

Businesses can only claim ITC if they have a valid invoice, which encourages them to keep proper
records.

3.5.2 Tracking Transactions:

GST allows the government to track transactions throughout the supply chain.

This makes it more difficult for businesses to hide sales or underreport their income.

3.5.3 Increased Compliance:

The simplified tax system and the use of technology have made it easier for businesses to comply
with tax laws.

This has led to increased tax collection and reduced tax evasion.

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 3. GST framework in India.
4.1 Central GST (CGST), State GST (SGST), Integrated GST (IGST)

4.1.1 CGST (Central Goods and Services Tax):

Explain that CGST is collected by the Central Government.

Explain that it applies to intra-state transactions, meaning the sale of goods or services happens
within the same state.

Give examples: If a shop in Mumbai, Maharashtra, sells a TV to a customer in Mumbai, CGST will
apply.

Explain that the revenue collected under CGST goes to the Central Government.

4.1.2 SGST (State Goods and Services Tax):

Explain that SGST is collected by the State Government.

Explain that it also applies to intra-state transactions.

Give examples: In the same example of the shop in Mumbai selling a TV to a customer in Mumbai,
SGST will also apply.

Explain that the revenue collected under SGST goes to the State Government.

Emphasize that CGST and SGST are levied together on the same transaction within a state.

4.1.3 IGST (Integrated Goods and Services Tax):

Explain that IGST is collected by the Central Government.

Explain that it applies to inter-state transactions, meaning the sale of goods or services happens
between two different states.

Give examples: If a factory in Gujarat sells a car to a dealer in Rajasthan, IGST will apply.

Explain how IGST is designed to ensure that the tax goes to the state where the goods or services are
consumed (the destination principle).

Explain the IGST mechanism: The exporting state collects the tax, and the Central Government
transfers it to the importing state.

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4.1.4 Flow of Revenue:

Use diagrams to illustrate the flow of CGST, SGST, and IGST revenue.

Show how CGST and SGST are shared in an intra-state sale.

Show how IGST is transferred from the exporting state to the importing state.

4.2 GST Council

4.2.1 Constitution and Composition:

Explain that the GST Council is a constitutional body.

Describe its composition: It consists of the Union Finance Minister and the State Finance Ministers.

Explain that each state has a certain weightage in voting.

4.2.2 Role and Functions:

Explain that the GST Council is the governing body of GST.

Describe its key functions:

Recommending GST rates.

Deciding on exemptions.

Determining the threshold for GST registration.

Formulating rules and procedures for GST.

Resolving disputes between the Central Government and State Governments.

Explain that the GST Council aims to harmonize GST across the country.

4.2.3 Decision Making:

Explain the voting mechanism in the GST Council.

Describe the required majority for decisions (usually three-fourths).

Explain how the Council ensures that both the Centre and the States have a say in GST matters.

4.3 GST Rates

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4.3.1 Different Tax Slabs:

Explain that GST has a multi-slab structure with different tax rates for different goods and services.

Describe the current tax slabs: 0%, 5%, 12%, 18%, and 28%.

Explain that some items are exempt from GST.

4.3.2 Classification of Goods and Services:

Explain how goods and services are classified under the Harmonized System of Nomenclature
(HSN) code and the Services Accounting Code (SAC).

Explain that the GST rate for a particular item depends on its HSN/SAC code.

4.3.3 Rationale for Different Rates:

Explain the reasons for having different tax slabs:

Essential goods (like food items) are taxed at lower rates or are exempt.

Luxury goods and demerit goods (like tobacco) are taxed at higher rates.

To maintain revenue neutrality (the government collects roughly the same amount of tax).

Mention that rates can be changed by the GST council.

4.4 Exemptions

4.4.1 Exempted Goods and Services:

Explain that some goods and services are exempt from GST.

List some common examples:

Essential food items (e.g., fresh vegetables, milk).

Healthcare services.

Educational services.

Agricultural activities.

Explain the reasons for exemptions:

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To protect the poor.

To promote social welfare.

4.4.2 Zero-Rated Supplies:

Explain the difference between exempted supplies and zero-rated supplies.

Explain that zero-rated supplies are taxable, but the tax rate is 0%.

Explain that exporters can claim a refund of the GST paid on inputs used to make exported goods
(i.e., they get Input Tax Credit).

Explain that this promotes exports.

4.5 Composition Scheme

4.5.1 Eligibility:

Explain that the composition scheme is a simplified scheme for small businesses.

Describe the eligibility criteria: Businesses with a turnover below a certain limit (e.g., Rs. 1.5 crore)
can opt for this scheme.

4.5.2 Features:

Explain the key features of the composition scheme:

Businesses pay a fixed percentage of their turnover as tax, instead of the regular GST rates.

They have to file fewer returns.

They cannot claim input tax credit.

They cannot charge GST to their customers.

4.5.3 Benefits and Drawbacks:

Explain the benefits for small businesses:

Simpler compliance.

Lower tax liability.

Explain the drawbacks:

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Limited ability to grow their business.

Cannot claim ITC.

4.6 Reverse Charge Mechanism (RCM)

4.6.1 Normal Charge vs. Reverse Charge:

Explain that normally, the supplier of goods or services is liable to pay GST.

Explain that in the reverse charge mechanism, the recipient of goods or services is liable to pay GST.

4.6.2 Situations for RCM:

Describe the situations where RCM applies:

Certain notified goods or services.

Transactions with unregistered suppliers.

Services provided by certain categories of service providers.

4.6.3 Why RCM?

Explain the reasons for RCM:

To increase tax compliance.

To protect the interests of small unregistered suppliers.

To simplify tax collection in certain situations.

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 4. GST registration and compliance.
5.1 Who needs to register for GST? (Turnover limits, types of businesses)

5.1.1 Taxable Person:

Explain who is a "taxable person" under GST.

Explain that not everyone needs to register. Only "taxable persons" are required to register.

5.1.2 Aggregate Turnover:

Explain the concept of "aggregate turnover." This is the total value of all sales.

Explain that businesses whose aggregate turnover exceeds a certain limit in a financial year are
required to register for GST.

5.1.3 Turnover Limits:

Mention the current turnover limits for GST registration. (These limits can change, so it's important
to refer to the latest official sources.)

Explain that there are different turnover limits for different states and for businesses dealing only in
goods versus those dealing in services as well.

Explain that the limit is lower in some special category states.

5.1.4 Compulsory Registration:

Explain that in some cases, registration is compulsory, regardless of turnover.

List examples of businesses that must register, such as:

Businesses involved in inter-state supply of goods.

Casual taxable persons (those who occasionally sell goods or services).

Non-resident taxable persons.

E-commerce operators.

Those liable to pay tax under the reverse charge mechanism.

5.1.5 Voluntary Registration:

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Explain that businesses below the threshold limit can also register voluntarily.

Discuss the advantages of voluntary registration, such as being able to claim input tax credit and
enhancing business credibility.

5.2 How to register for GST (Step-by-step process)

5.2.1 Online Registration:

Explain that GST registration is done online through the GST portal (www.gst.gov.in).

5.2.2 Documents Required:

List the documents required for GST registration:

PAN (Permanent Account Number) of the business

Aadhaar number

Proof of business registration (e.g., registration certificate)

Address proof of the business premises

Bank account details

Photographs

Authorization letter (if applicable)

5.2.3 Step-by-Step Process:

Describe the step-by-step process of GST registration:

Obtain a PAN.

Visit the GST portal.

Fill in Part A of the registration form (PAN verification).

Receive a Temporary Reference Number (TRN).

Fill in Part B of the registration form with detailed information.

Upload the required documents.

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Verification by GST authorities.

Issue of GSTIN upon successful verification.

5.2.4 Cancellation of Registration

Explain the circumstances under which GST registration can be cancelled.

Explain the process of cancellation of GST registration.

5.3 GST Identification Number (GSTIN)

5.3.1 Structure of GSTIN:

Explain the structure of the GSTIN (a 15-digit alphanumeric number).

Explain what each part of the GSTIN represents:

State code

PAN

Entity code

Check digit

5.3.2 Importance of GSTIN:

Explain why GSTIN is important:

It is used for identifying a registered taxpayer.

It is required for filing GST returns.

It is necessary for claiming input tax credit.

It is used for all transactions under GST.

5.4 Filing GST returns (Different types of returns, due dates, penalties for late filing) 5.4.1
What are GST Returns?

Explain that GST returns are documents that taxpayers file with the tax authorities, reporting their
sales, purchases, and tax liability.

5.4.2 Types of GST Returns:

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Describe the different types of GST returns:

GSTR-1: Return of outward supplies (sales).

GSTR-2A: Auto-populated inward supplies (purchases) statement.

GSTR-2B: Auto-generated statement detailing eligible and ineligible Input Tax Credit (ITC).

GSTR-3B: Summary return of outward supplies and input tax credit.

GSTR-4: Return for taxpayers under the composition scheme.

GSTR-9: Annual return.

GSTR-9C: Reconciliation statement.

5.4.3 Due Dates for Filing Returns:

Explain the due dates for filing different GST returns. (These dates can change, so refer to the latest
official sources.)

5.4.4 Late Filing Penalties:

Explain the penalties for late filing of GST returns.

Explain that penalties can include late fees and interest.

5.5 Maintaining records (What kind of records businesses need to keep)

5.5.1 Types of Records:

Explain the types of records that businesses need to maintain under GST:

Invoices (sales invoices and purchase invoices)

Delivery challans

Debit notes and credit notes

Accounts of stock

Input tax credit records

Electronic cash ledger

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Electronic credit ledger

Returns filed

5.5.2 Manner of Maintaining Records:

Explain how records should be maintained (e.g., electronically or manually).

5.5.3 Period for Retention of Records:

Explain how long businesses are required to keep these records (e.g., for 6 years).

5.6 E-way bill (What it is and when it's needed for moving goods)

5.6.1 What is an E-way Bill?

Explain that an e-way bill is an electronic document generated on the GST portal for the movement
of goods.

It is a document that shows that the goods being transported comply with the GST law.

5.6.2 When is an E-way Bill Required?

Explain when an e-way bill is required:

For the movement of goods with a consignment value exceeding a certain amount (e.g., Rs. 50,000).

For inter-state and intra-state movement of goods.

5.6.3 Contents of an E-way Bill:

Explain the information contained in an e-way bill:

Details of the consignor (sender) and consignee (receiver)

Description of the goods

Value of the goods

Vehicle details

Place of origin and destination

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5.6.4 Validity of an E-way Bill:

Explain how long an e-way bill is valid, which depends on the distance of transportation.

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 5. Impact on Different Sectors

6.1 Manufacturing

6.1.1 Supply Chain Reorganization:

Explain how GST has led manufacturers to restructure their supply chains.

Before GST, manufacturers often set up factories in multiple states to avoid state taxes. Now, with a
unified tax, they can consolidate production in more efficient locations.

Discuss how this has reduced logistics costs and improved efficiency.

6.1.2 Input Tax Credit (ITC) Impact:

Explain how manufacturers benefit from ITC by getting credit for GST paid on raw materials,
machinery, and other inputs.

Show how this reduces the cost of production and makes manufacturing more competitive.

6.1.3 Impact on Small and Medium Enterprises (SMEs):

Discuss how GST has affected smaller manufacturers.

Explain the challenges they face in complying with GST regulations.

Also, discuss how GST has opened up new market opportunities for them by making it easier to sell
their products across the country.

6.1.4 Changes in Manufacturing Costs:

Analyze how GST has affected the overall cost of manufacturing.

Discuss how the elimination of the cascading effect has reduced costs for some manufacturers, while
increased compliance costs have affected others.

6.2 Retail

6.2.1 Changes in Pricing:

Explain how GST has affected the prices of goods in the retail sector.

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Discuss how the removal of the cascading effect has led to lower prices for some products.

Explain that for some goods, prices might have increased.

6.2.2 Impact on Small Retailers:

Discuss the challenges faced by small retailers in adapting to GST.

Explain how they have to compete with larger retailers who are better equipped to handle GST
compliance.

Discuss the benefits of the composition scheme for small retailers.

6.2.3 E-commerce and GST:

Explain how GST has affected e-commerce.

Discuss how GST has simplified online sales across different states.

6.2.4 Impact on Consumers:

Explain how GST has impacted consumers.

Discuss how prices of essential goods have been kept low.

6.3 Services

6.3.1 Impact on Different Service Sectors:

Discuss how GST has affected various service sectors, including:

Restaurants and Hotels: Explain how GST has changed the way these businesses charge customers.

Information Technology (IT): Discuss how GST has affected software and IT services.

Telecommunications: Explain how GST has impacted the telecom industry.

Financial Services: Discuss the impact on banking, insurance, etc.

6.3.2 Input Tax Credit for Services:

Explain how service providers can claim ITC on the GST they pay on their inputs (e.g., office rent,
supplies).

Show how this can reduce their operating costs.

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6.3.3 Compliance Challenges:

Discuss the challenges faced by service providers in complying with GST, such as determining the
place of supply of services.

6.4 Agriculture

6.4.1 Exemption of Agricultural Products:

Explain that many agricultural products are exempt from GST.

Discuss the reasons for this exemption (e.g., to keep food prices low, to support farmers).

6.4.2 Impact on Agricultural Inputs:

Discuss how GST has affected the prices of agricultural inputs like fertilizers, pesticides, and
tractors.

Explain how farmers can claim ITC on these inputs.

6.4.3 Supply Chain Efficiencies:

Explain how GST has improved the efficiency of the agricultural supply chain by reducing
transportation time and costs.

6.4.4 Impact on Farmers:

Explain how GST has impacted farmers

Discuss how a unified market has helped them.

6.5 Exports and Imports

6.5.1 Zero-Rating of Exports:

Explain that exports are zero-rated under GST, meaning no GST is levied on exported goods.

Discuss how this makes Indian exports more competitive in the international market.

6.5.2 Input Tax Credit for Exporters:

Explain how exporters can claim refunds of the GST paid on the inputs used to manufacture
exported goods.

6.5.3 Imports and IGST:

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Explain that IGST is levied on imported goods.

Discuss how this ensures a level playing field between domestic and imported goods.

6.5.4 Impact on Trade:

Discuss the overall impact of GST on India's foreign trade.

Explain how it has simplified procedures and reduced transaction costs.

7. Case Study: Shree Laxmi Traders

7.1 Choosing a Business:

Select a small business in your locality, such as:

A grocery store

A small manufacturing unit (e.g., a bakery, a garment shop)

A restaurant

Make sure the business has been operating for at least a few years to see the impact of GST.

7.2 Interviewing the Owner:

Prepare a list of questions to ask the owner, such as:

How has GST affected your business operations?

What were the main challenges you faced in transitioning to GST?

How has GST affected your costs and pricing?

Have you claimed input tax credit, and how has it affected your profitability?

How has GST affected your sales and customer base?

What are your overall views on GST?

7.3 Analyzing Financial Records:

If possible, try to get some basic financial information from the business, such as:

Sales figures before and after GST

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Cost of goods sold

Profit margins

Tax paid before and after GST

This will help you quantify the impact of GST on the business.

7.4 Writing the Case Study:

Structure your case study as follows:

Introduction: Provide background information about Shree Laxmi Traders (type of business, size,
location).

Pre-GST Scenario: Describe how the business operated before GST, including the taxes they paid.

Transition to GST: Explain the challenges the business faced in registering for GST, understanding
the new rules, and adapting their systems.

Impact of GST: Analyze how GST has affected the business's costs, prices, sales, and profitability.
Use data from the interview and financial records to support your analysis.

Challenges and Solutions: Discuss the specific challenges the business faced and how they overcame
them.

Conclusion: Summarize the key findings of the case study and provide an overall assessment of the
impact of GST on Shree Laxmi Traders.

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 6. Case Study: Shree Laxmi Traders
6.1 Introduction: Shree Laxmi Traders

6.1.1 Business Overview:

Detailed Product Description:

What specific types of groceries does Shree Laxmi Traders sell? (e.g., packaged foods, fresh
produce, dairy products, household cleaning supplies, personal care items).

What are some of their most popular products?

Do they sell any products from local suppliers or manufacturers?

Are there any seasonal variations in their product offerings? (e.g., special items for festivals).

Store Layout and Ambiance:

Describe the physical layout of the store. (e.g., size, number of aisles, how products are displayed).

What is the overall atmosphere or ambiance of the store? (e.g., clean, organized, friendly).

Are there any special features of the store? (e.g., a bakery counter, a fresh produce section).

Customer Service:

How does Shree Laxmi Traders interact with its customers? (e.g., personalized service, self-service).

Do they offer any special services? (e.g., home delivery, credit).

6.1.2 Size and Scale of Operations:

Detailed Turnover Information:

Provide a range for the annual turnover (e.g., "between Rs. 50 lakh and Rs. 1 crore").

If possible, try to get a sense of how turnover has changed over the past few years.

Inventory Management in Depth:

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How often does Shree Laxmi Traders replenish its stock?

What methods do they use to track inventory? (e.g., manual records, computerized system).

Do they have any special storage requirements for certain products? (e.g., refrigeration).

How do they minimize waste or spoilage of perishable goods?

Supplier Relationships:

Who are Shree Laxmi Traders' main suppliers?

How do they select their suppliers? (e.g., price, quality, reliability).

What are the terms of their relationships with suppliers? (e.g., payment terms, delivery schedules).

6.1.3 Pre-GST Business Practices:

Supplier Interactions Pre-GST:

Did suppliers have different tax obligations in different states? How did this affect Shree Laxmi
Traders?

Customer Transactions Pre-GST:

How were sales recorded? What kind of invoices were used?

Technology Use Pre-GST:

What technology did they use, if any, for accounting and inventory?

6.2 Pre-GST Tax System

6.2.1 Taxes Applicable to Shree Laxmi Traders:

VAT Details:

What was the VAT rate on the different categories of goods sold by Shree Laxmi Traders? (e.g.,
essential food items, packaged foods, household goods).

How did they calculate VAT?

How frequently did they have to pay VAT to the state government?

Octroi/Entry Tax Details:

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Did they have to pay octroi or entry tax on goods brought into the city or state?

If so, how was this calculated, and how often did they have to pay it?

How did this affect their costs?

6.2.2 Compliance Burden:

Record-Keeping Complexity:

What specific records did they have to maintain for each tax?

How time-consuming was it to prepare and file tax returns?

Did they need to hire extra staff or seek professional help to handle tax compliance?

Interaction with Tax Authorities:

Did they have any experiences with tax inspections or audits?

How would they describe their interactions with the tax authorities?

6.2.3 Impact of Pre-GST Taxes on Business:

Pricing Strategies Pre-GST:

How did they factor the various taxes into their pricing decisions?

Were they able to pass on the full burden of the taxes to their customers, or did it affect their profit
margins?

Competition Pre-GST:

How did the different tax rates in neighboring states affect their competitiveness?

Did it limit their ability to attract customers from other states?

Interstate Sales Challenges:

Did Shree Laxmi Traders sell goods to customers in other states?

If so, what were the challenges involved in complying with the tax laws of those states?

6.3 Transition to GST

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6.3.1 GST Registration Process:

Challenges in Registration:

Were there any technical problems with the GST portal during registration?

Did they find the online registration process easy or difficult?

Did they have to make multiple visits to any government offices?

Time and Resources:

How much time did the owner and staff spend on the registration process?

What were the direct and indirect costs associated with registration?

Support Received:

Did they receive any assistance from the government or any other organizations during the
registration process?

6.3.2 Understanding GST Provisions:

Training and Awareness:

What specific training programs or workshops did the owner and staff attend?

Were these programs helpful?

Did they find the GST laws and rules easy to understand?

Challenges in Understanding Key Concepts:

Which GST concepts did they find most challenging to understand? (e.g., input tax credit, reverse
charge mechanism, different types of GST).

How did they address these challenges?

Information Sources:

What sources of information did they rely on to learn about GST? (e.g., government websites,
publications, tax advisors).

6.3.3 Changes in Business Operations:

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Accounting System Changes:

What specific changes did they make to their accounting software or systems?

How much did it cost to upgrade their systems?

Did they face any difficulties in adapting to the new systems?

Invoicing Changes:

What changes did they make to their invoices to comply with GST requirements?

Did they have to print new invoice formats?

Supplier Relationship Changes:

Did they have to change their supplier agreements to ensure GST compliance?

Did GST change their relationships with suppliers in any way?

6.4 Impact of GST on Shree Laxmi Traders

6.4.1 Impact on Input Tax Credit (ITC):

ITC on Purchases:

Can Shree Laxmi Traders claim ITC on all or most of their purchases? (e.g., goods purchased for
resale).

Are there any purchases for which they are not eligible to claim ITC?

Impact on Cost of Goods Sold:

How has ITC affected their cost of goods sold? Has it led to a significant reduction?

Can you provide any figures or estimates?

Working Capital Impact:

How has the ITC mechanism affected their working capital? Has it improved their cash flow?

6.4.2 Changes in Pricing and Profitability:

Pricing Adjustments:

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Did Shree Laxmi Traders have to change the prices of their products after GST was implemented?

If so, which products saw price increases, and which saw price decreases? Why?

Profit Margin Analysis:

How have their profit margins changed under GST?

Can you provide any data or estimates to support this?

What are the reasons for these changes?

Competition and Pricing Power:

How has GST affected their ability to set competitive prices?

Do they have more or less pricing power compared to before GST?

6.4.3 Impact on Sales and Customer Base:

Sales Volume Changes:

Has GST affected their overall sales volume? Has it increased, decreased, or stayed the same?

Are there any specific products or product categories that have seen significant changes in sales?

Competition:

Has GST made it easier or more difficult for them to compete with larger retailers or online sellers?

Customer Base:

Has GST had any impact on their customer base? (e.g., have they gained or lost customers?)

Have their customers' buying habits changed?

6.4.4 Compliance Costs:

Costs of GST Compliance:

What are the direct costs of complying with GST (e.g., fees paid to accountants, cost of GST
software)?

What are the indirect costs (e.g., time spent by staff on GST compliance)?

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Comparison with Pre-GST Costs:

How do these costs compare to the costs of complying with the pre-GST tax system?

Is GST compliance more or less expensive than the previous system?

6.5 Challenges and Solutions

6.5.1 Challenges Faced:

Specific Challenges:

Be very specific about the challenges. For example:

"Difficulty in reconciling their old accounting system with the new GST requirements."

"Problems with the GST portal, such as slow loading times or errors in filing returns."

"The need to learn new accounting procedures and train staff."

Initial Hurdles:

What were the biggest hurdles they faced in the first few months of GST implementation?

Ongoing Challenges:

Are there any ongoing challenges they still face with GST compliance?

6.5.2 Solutions and Adaptations:

Seeking Professional Help:

Did they hire a tax advisor, accountant, or GST consultant?

How helpful was this professional advice?

Technology Adoption:

Did they invest in new GST software or upgrade their existing systems?

Did this software make compliance easier?

Process Changes:

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What changes did they make to their internal processes to ensure GST compliance? (e.g., changes to
invoicing, record-keeping, inventory management).

Staff Training:

How did they train their staff to handle GST-related tasks?

Was the training effective?

6.6 Conclusion: Overall Assessment of GST Impact

6.6.1 Summary of Findings:

Quantifiable Impact:

Try to quantify the impact of GST as much as possible. For example:

"GST has reduced their input costs by approximately 5%."

"Compliance costs have increased by Rs. 10,000 per year."

"Sales have increased by 2% since GST implementation."

Overall Impact:

Provide a balanced assessment. Was the impact mostly positive, mostly negative, or a mix of both?

6.6.2 Business Owner's Perspective:

конкретно Feedback:

What are the owner's main likes and dislikes about GST?

What are their biggest concerns about the GST system?

Suggestions for Improvement:

What specific suggestions does the owner have for improving the GST system? (e.g., simplifying the
rules, improving the GST portal, providing more support for small businesses).

6.6.3 Broader Implications:

Lessons Learned:

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What are the key lessons that other small businesses can learn from Shree Laxmi Traders' experience
with GST?

Generalizability:

How generalizable are the findings of this case study? Do you think other similar businesses would
have a similar experience with GST?

Policy Recommendations:

Based on this case study, what recommendations can you make to the government or policymakers
regarding GST and small businesses?

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47 | P a g e
 7. Survey and Data Analysis

7.1 Designing the Survey

7.1.1 Defining Objectives:

Clearly state the goals of your survey. What do you want to find out about GST's impact?
Examples:

Assess the level of awareness about GST among businesses.

Identify the main challenges businesses face in GST compliance.

Measure the impact of GST on business costs and profitability.

Evaluate the overall perception of GST among businesses.

7.1.2 Target Audience:

Specify the types of businesses you will survey (e.g., small retailers, manufacturers, service
providers).

Consider the size of the businesses (e.g., in terms of turnover or number of employees).

Think about the location of the businesses (e.g., specific city or region).

7.1.3 Survey Questions:

Develop a mix of question types:

Multiple-choice questions: Provide pre-defined options for easy analysis (e.g., "What is your
GST registration status? a) Registered, b) Not registered, c) Applied for registration").

Rating scale questions: Use a scale (e.g., 1 to 5) to measure opinions or satisfaction (e.g., "How
satisfied are you with the GST system? 1 - Very dissatisfied, 5 - Very satisfied").

Open-ended questions: Allow respondents to provide detailed answers in their own words (e.g.,
"What are the biggest challenges you face in complying with GST?").

Sample Questions: Here are some age-appropriate sample questions, categorized for clarity:

Awareness of GST:
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"Before GST was introduced, were you aware of the previous indirect tax system? (Yes/No)"

"How would you rate your current understanding of GST? (1 - Very poor, 5 - Excellent)"

"Where do you get most of your information about GST? (Multiple choice: Government
websites, Tax advisors, Trade associations, Other businesses, News media, etc.)"

Impact on Business:

"Has GST changed your business costs? (a) Increased, b) Decreased, c) No change)"

"How has GST affected your sales volume? (a) Increased, b) Decreased, c) No change)"

"Has GST made it easier or harder to do business in other states? (a) Easier, b) Harder, c) No
change)"

"How has GST affected your pricing strategy? (Open-ended)"

Challenges Faced:

"What is the most challenging aspect of GST compliance for your business? (Multiple choice:
Filing returns, Understanding rules, ITC claims, Technology issues, etc.)"

"Have you faced any difficulties with the GST portal? (Yes/No) If yes, please specify. (Open-
ended)"

"What kind of support or assistance would help your business with GST compliance? (Open-
ended)"

Overall Perception:

"Do you think GST has been beneficial for your business? (Yes/No/Neutral)"

"What are the biggest advantages of GST, in your opinion? (Open-ended)"

"What are the biggest disadvantages of GST, in your opinion? (Open-ended)"

"Overall, how would you rate the GST system? (1 - Very poor, 5 - Excellent)"

Pilot Testing:

Before distributing the survey, test it with a small group of people to ensure the questions are
clear and easy to understand.

Revise the questions based on the feedback you receive.

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7.2 Collecting Data

7.2.1 Sampling Method:

Explain how you will select the businesses to participate in your survey. Will you use:

Random sampling: Every business has an equal chance of being selected.

Convenience sampling: Selecting businesses that are easily accessible to you.

Stratified sampling: Dividing businesses into groups (e.g., by size or sector) and then selecting
a sample from each group.

7.2.2 Sample Size:

Determine how many businesses you need to survey to get reliable results.

A larger sample size generally leads to more accurate findings, but consider the time and
resources you have.

7.2.3 Survey Distribution:

Decide how you will distribute the survey:

Online surveys: Use a platform like Google Forms or SurveyMonkey (ensure these are used in
an age-appropriate and safe manner).

In-person surveys: Visit businesses and conduct the survey face-to-face.

Email surveys: Send the survey to businesses via email.

7.2.4 Ethical Considerations:

Ensure that your survey and data collection methods are ethical.

Obtain informed consent from participants before they take the survey.

Keep their responses confidential and anonymous.

Explain the purpose of the survey and how the data will be used.

7.3 Analyzing the Data

7.3.1 Data Entry and Organization:

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Compile the data you collect into a spreadsheet or database.

Double-check the data for accuracy.

7.3.2 Descriptive Statistics:

Use descriptive statistics to summarize the data:

Frequencies and percentages: For categorical data (e.g., "60% of businesses are registered for
GST").

Mean, median, and mode: For numerical data (e.g., "The average satisfaction rating with GST
is 3.5").

Standard deviation: To measure the spread or variability of the data.

7.3.3 Data Visualization:

Use charts, graphs, and tables to present your findings visually:

Bar charts: To compare frequencies or percentages across categories.

Pie charts: To show how a whole is divided into parts.

Line graphs: To show trends over time.

Histograms: To show the distribution of numerical data.

Tables: To present detailed data in an organized format.

7.3.4 Tools for Analysis:

You can use tools like:

Microsoft Excel or Google Sheets for basic analysis and charting.

Online survey platforms often have built-in analysis features.

7.4 Interpreting the Results

7.4.1 Summarize Key Findings:

What are the most important things you learned from the survey?

Highlight any significant trends or patterns in the data.

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7.4.2 Relate Findings to Research Objectives:

Do your survey results answer the questions you set out to investigate?

How do your findings relate to your research objectives?

7.4.3 Discuss Implications:

What do your findings suggest about the impact of GST on businesses?

Are there any positive or negative consequences of GST that your survey has revealed?

7.4.4 Limitations of the Survey:

Acknowledge any limitations of your survey, such as:

Sample size: Was your sample size large enough to be representative?

Sampling bias: Was there any bias in how you selected participants?

Response rate: Did you receive responses from a large percentage of the businesses you
surveyed?

Self-reported data: Survey responses reflect participants' perceptions, which may not always be
completely accurate.

7.4.5 Recommendations:

Based on your survey results, what recommendations can you make?

For businesses: How can they improve their GST compliance or adapt to the GST system?

For the government: Are there any ways the GST system could be improved, or what kind of
support can be provided to businesses?

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 8. Challenges in Implementation

8.1 Technical Glitches

8.1.1 GST Portal Issues:

Describe the problems businesses faced with the GST portal (www.gst.gov.in).

Discuss issues like slow loading times, website crashes, and difficulty in logging in.

Explain how these glitches affected businesses' ability to register, file returns, and pay taxes on
time.

Provide specific examples of error messages or technical problems encountered by businesses.

8.1.2 Software Compatibility:

Explain the challenges related to the compatibility of existing accounting software with the GST
system.

Discuss the difficulties businesses faced in upgrading or replacing their software.

Explain how this led to increased costs and disruption of business operations.

8.1.3 Data Migration:

Describe the problems associated with transferring data from the old tax system to the new GST
system.

Discuss issues like data loss, errors in data transfer, and the time taken for migration.

Explain how this affected businesses' ability to maintain accurate records and comply with GST
requirements.

8.2 Complexity of the Rules

8.2.1 Understanding GST Laws:

Explain how the complexity of GST laws and regulations posed a significant challenge for
businesses, especially small businesses.

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Discuss the difficulties in understanding concepts like input tax credit, reverse charge
mechanism, and place of supply rules.

Provide examples of specific rules or provisions that were particularly difficult to understand.

8.2.2 Multiple Return Filings:

Describe the requirement for businesses to file multiple GST returns (e.g., GSTR-1, GSTR-3B).

Explain how this increased the compliance burden, especially for small businesses with limited
resources.

Discuss the challenges in reconciling data across different returns.

8.2.3 Frequent Changes in Rules:

Explain how frequent changes in GST rules, rates, and procedures created confusion and
uncertainty for businesses.

Discuss the difficulties businesses faced in keeping up with these changes and adapting their
systems accordingly.

Provide examples of specific rule changes that caused significant disruption.

8.3 Lack of Awareness

8.3.1 Insufficient Knowledge:

Explain how a lack of awareness about GST among businesses, particularly small businesses,
hindered its smooth implementation.

Discuss the reasons for this lack of awareness, such as limited access to information and
resources.

Explain how this led to non-compliance, errors in tax payments, and difficulties in claiming input
tax credit.

8.3.2 Information Asymmetry:

Describe how larger businesses with better resources had an advantage in understanding and
complying with GST, while smaller businesses struggled.

Discuss the challenges faced by small businesses in accessing reliable and timely information
about GST.

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8.3.3 Language Barriers:

Explain how language barriers created additional challenges for businesses in understanding
GST laws and procedures, especially in non-English speaking regions.

8.4 Training and Support

8.4.1 Need for Training Programs:

Discuss the importance of providing adequate training and support to businesses to facilitate
GST implementation.

Explain the shortcomings in the training programs provided by the government and other
organizations.

Discuss the need for more practical, hands-on training sessions.

8.4.2 Availability of Support:

Describe the difficulties businesses faced in getting timely and accurate support from tax
authorities and other agencies.

Discuss the lack of helplines, online resources, and support centers.

Explain how this forced businesses to rely on expensive tax consultants and increased their
compliance costs.

8.4.3 Capacity Building:

Explain the need for capacity building among tax officials to ensure effective implementation of
GST.

8.5 Other Challenges

8.5.1 Initial Increase in Compliance Costs: The transition to GST has led to an initial
increase in compliance costs for many small businesses. This includes expenses related to
upgrading accounting software, hiring tax professionals, and training staff on the new GST
procedures.

8.5.2 Difficulty in Adapting to New Technology: GST is heavily reliant on technology,

with online registration, return filing, and payment processes. Many small businesses,

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particularly those in rural areas or with limited resources, have faced difficulties in adapting
to this new technological requirement.

8.5.3 Working Capital Issues: The implementation of GST has led to working capital issues
for some small businesses, particularly exporters and those dealing with delayed payments.
The time lag between paying GST on inputs and receiving refunds or payments from
customers has created cash flow problems for these businesses.

8.5.4 Increased Complexity of Documentation: GST requires businesses to maintain

detailed records of all transactions, including invoices, debit notes, and credit notes. This has
increased the complexity of documentation for small businesses, which often lack the
resources to maintain such extensive records.

8.5.5 Lack of Clarity on Transitional Issues: During the initial phase of GST
implementation, there was a lack of clarity on several transitional issues, such as the
treatment of existing stock, ongoing contracts, and input tax credits. This created confusion
and uncertainty for businesses, leading to compliance challenges.

8.5.6 Anti-Profiteering Measures: While intended to ensure that the benefits of GST rate
reductions are passed on to consumers, the anti-profiteering provisions have created
additional compliance requirements for businesses. Determining whether price reductions are
commensurate with tax reductions has been complex and challenging for many businesses.

8.5.7 Difficulty in Transitioning from VAT to GST

Many small businesses that were earlier under state VAT regimes struggled with the shift to
a fully digital GST system.

The concept of input tax credit (ITC) was new to many, leading to errors in claims.

8.5.8 Impact on Informal and Unorganized Sectors

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Small businesses operating in cash-based transactions (e.g., street vendors, small workshops)
found it difficult to adapt to GST’s formal invoicing requirements.

Many chose to remain unregistered, missing out on business opportunities with larger, GST-
compliant firms.

8.5.9 Challenges in Filing Annual Returns (GSTR-9/9C)

Small businesses find the annual reconciliation process cumbersome due to mismatches
between monthly returns and books of accounts.

The requirement for audit certification (GSTR-9C) for businesses above ₹2 crore adds to
compliance costs.

8.5.10 GST’s Impact on Pricing and Competitiveness

Some small businesses saw increased costs due to GST compliance, forcing them to raise
prices and lose customers.

Others struggled to compete with larger firms that could absorb compliance costs more
easily.

8.5.11 Fear of Audits and Scrutiny

Small businesses are often intimidated by the possibility of GST audits and inspections.

Lack of proper documentation increases their vulnerability to penalties.

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 9. Future Scope of GST

9.1 Simplification of the System

9.1.1 Reducing Complexity:

Explain that even though GST was meant to simplify taxes, there's still room for improvement.

Discuss the possibility of further reducing the number of different GST rates (tax slabs). For
example, instead of 5%, 12%, 18%, and 28%, there could be just two or three rates.

Explain how fewer rates would make it easier for businesses to classify their goods and services
and file their returns.

9.1.2 Streamlining Compliance:

Talk about how the GST return filing process could be made even simpler.

For example, instead of filing multiple returns every month, there could be a system of filing just
one or two returns.

Discuss how technology can be used to automate GST compliance, such as through better
software that automatically calculates and files taxes.

9.1.3 Improving Clarity of Laws:

Explain that GST laws and rules could be written in a simpler and more straightforward way,
using plain language that is easy for everyone to understand.

Discuss how this would reduce confusion and the chances of businesses making mistakes.

9.2 Bringing More Items Under GST

9.2.1 Including Excluded Items:

Explain that currently, some major items are still outside the GST system. The two main ones
are:

Petroleum products (like petrol, diesel, and cooking gas)

Real estate (buying and selling of land and buildings)

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Discuss the potential benefits of bringing these items under GST, such as:

Increased tax revenue for the government

Elimination of different taxes on these items in different states

A more unified national market

9.2.2 Challenges of Inclusion:

Explain why it has been difficult to include these items under GST so far.

For petroleum products, states are worried about losing a major source of income.

For real estate, there are complex issues like stamp duty and registration charges that are
currently levied by states.

Discuss the potential solutions to these challenges, such as finding ways for the central and state
governments to agree on how to share the revenue.

9.3 Use of Technology

9.3.1 Enhancing the GST Portal:

Discuss how the GST portal (www.gst.gov.in) could be improved to make it more user-friendly
and efficient.

For example:

Making the website faster and more reliable

Providing better search and help functions

Developing a mobile app for GST compliance

9.3.2 Artificial Intelligence (AI) and Machine Learning (ML):

Explain how new technologies like AI and ML can be used in the GST system. For example:

AI could be used to automatically detect errors in GST returns.

ML could be used to predict which businesses are likely to evade taxes, so tax authorities can
focus their efforts on those businesses.

9.3.3 Blockchain Technology:

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Briefly explain how blockchain, the technology behind cryptocurrencies, could be used to make
GST transactions more transparent and secure.

Explain that it can help in tracking the movement of goods and prevent fraud.

9.4 Reducing Tax Evasion

9.4.1 Strengthening Enforcement:

Discuss how the government can use GST to reduce tax evasion (illegally avoiding paying
taxes).

For example, by:

Using data analytics to identify suspicious transactions

Conducting more audits of businesses

Imposing stricter penalties for tax evasion

9.4.2 Promoting Voluntary Compliance:

Explain that in addition to enforcement, it's also important to encourage businesses to pay their
taxes voluntarily.

Discuss how this can be done by:

Making the GST system simpler and easier to comply with

Educating businesses about the benefits of paying taxes

Recognizing and rewarding businesses that have a good record of tax compliance

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10. Findings and Suggestions

10.1 Summarize Your Key Findings

10.1.1 What You Found About Awareness:

Did many small businesses know about GST before it was introduced?

Example: "Our research showed that many small shop owners hadn't heard much about GST
before it started. They were more focused on running their shops day-to-day."

How well do they understand it now?

Example: "Now, some understand the basics, like paying GST when they sell something. But
things like input tax credit (getting money back on taxes they've paid) are still confusing for
many."

Where do they get their information about GST? (e.g., from the government, accountants, or
other sources)

Example: "Most small businesses get their GST information from their accountants or tax
advisors. Some also try to learn from government websites, but they can be hard to understand."

10.1.2 How GST Has Affected Businesses:

What are the main ways GST has changed how small businesses operate?

Example: "GST has meant that small businesses have to keep much more detailed records of
what they buy and sell. They also have to file tax returns online, which is new for many."

Has it made things easier or harder for them?

Example: "For some, GST has made it easier to sell their goods across different states. But for
many, it has made things harder because of the extra paperwork and computer work."

How has it affected their costs, prices, and sales?

Example: "GST has changed the prices of some products. Some have become cheaper, but
others have become more expensive. This has affected how much of those products small shops
sell."

10.1.3 Challenges Small Businesses Face:

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What are the biggest problems small businesses have with GST?

Example: "The biggest problems are understanding the GST rules, using the online system, and
keeping up with all the changes."

Is it the technology, the rules, or something else?

*Example:* "It's a mix. The technology can be tricky, the rules are hard to understand, and
there's a lot of new paperwork."

How have these challenges affected their ability to grow and succeed?

Example: "These challenges take up a lot of time and money for small businesses. This can
make it harder for them to grow and compete with bigger businesses."

10.1.4 The Good Things About GST:

What are the positive things that have come from GST?

Example: "One good thing is that GST has made it easier for businesses to sell their products all
over India without paying different taxes in each state."

Have there been any benefits, like making it easier to trade across different states?

Example: "Yes, it's now simpler for a shop in Maharashtra to sell something to a customer in
Tamil Nadu."

Are there any ways in which GST has helped small businesses?

Example: "For some small businesses, GST has meant they don't have to pay as many different
taxes as before."

10.1.5 What People Think About GST:

In general, what do small business owners think about GST?

Example: "Many small business owners have mixed feelings about GST. They see some good
things, but they also face a lot of difficulties."

Do they think it's a good thing or a bad thing?

Example: "It's not a simple 'good' or 'bad.' Many say it has the potential to be good, but it needs
to be improved."

What are their main concerns and hopes for the future of GST?
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Example: "Their main concerns are the complexity and the time it takes to comply. They hope
that GST will become simpler and more business-friendly in the future."

10.2 Provide Suggestions

10.2.1 Making GST Simpler:

How can the GST system be made easier for small businesses to understand and follow?

Example: "The government could create simple guides and videos that explain GST in plain
language. They could also hold workshops in local areas to help business owners."

Should there be fewer tax rates?

Example: "Yes, having fewer tax rates would make things much easier. Maybe just two or three
rates instead of so many."

Can the rules and paperwork be simplified?

Example: "The government could reduce the amount of paperwork and make the online forms
easier to fill out. They could also allow small businesses to file their returns less often."

10.2.2 Better Technology and Support:

What kind of technology would make GST compliance easier for small businesses?

Example: "Easy-to-use software that automatically calculates GST and fills out the forms would
be a big help. A simple mobile app would also be useful."

Could the government provide better software or a more user-friendly website?

Example: "The government could work with tech companies to create free or low-cost software
for small businesses. They could also improve the GST website to make it easier to navigate."

What kind of training and support do small businesses need to use GST effectively?

Example: "Small businesses need access to helplines where they can get quick answers to their
questions. They also need training in their own language and in their local area."

10.2.3 Helping Small Businesses:

Are there specific things the government could do to help small businesses with GST?

Example: "The government could provide financial assistance to help small businesses buy GST
software or pay for training."
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Should there be special rules or programs for very small businesses?

Example: "Yes, very small businesses could have a simpler system with fewer rules and less
paperwork."

How can the government make sure that small businesses can take advantage of the benefits of
GST?

Example: "The government could create programs to educate small businesses about the
benefits of GST, such as how it can help them grow their business."

10.2.4 Looking Ahead:

What are the most important things that need to happen to make GST work well in the future?

Example: "The most important things are to simplify the system, provide better support, and use
technology to make things easier."

How can GST be improved to help small businesses grow and create jobs?

Example: "A simpler GST system would free up time and money for small businesses, which
could help them expand and hire more people."

What changes would make GST a really good system for everyone?

Example: "GST would be a really good system if it was easy to understand, easy to use, and
helped businesses of all sizes to grow."

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11. Conclusion

11.1 Restate the Main Points of Your Project

11.1.1 Summary of Findings:

Summarize the key findings from each section of your report in more detail. Instead of brief
points, elaborate on what you discovered.

For example: "Our survey of small businesses revealed that while many are aware of GST, a
significant portion still face challenges in understanding its complexities. Specifically, they
struggle with the input tax credit mechanism and the frequent changes in GST regulations. This
lack of clear understanding often leads to compliance issues and a higher burden for these
businesses."

"Our analysis of the GST portal indicates that while there have been improvements in its
functionality and user interface, some technical issues persist. Businesses continue to report
problems with slow loading times during peak periods and difficulties in reconciling input tax
credits. These technical challenges hinder the smooth implementation of GST and affect
business operations."

"Interviews with experts and industry stakeholders suggest that simplifying GST and
expanding its scope to include items like petroleum products and real estate could yield
substantial benefits. A simplified structure with fewer tax slabs would ease compliance, while
broader coverage would lead to a more unified and efficient tax system."

11.1.2 Achievement of Objectives:

Provide a more detailed review of how your research has addressed the initial objectives of
your project.

For example: "This project aimed to provide a comprehensive assessment of GST's impact on
small businesses. Through our research, we have achieved this by:

Evaluating the level of awareness and understanding of GST among small businesses.

Identifying the specific challenges they face in GST compliance.

Analyzing the positive and negative impacts of GST on their operations.

Gathering expert opinions on potential improvements to the GST system."

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11.2 Give Your Overall Opinion on the Impact of GST

11.2.1 Positive Impacts:

Discuss the positive impacts of GST in greater depth, providing specific examples and data
where possible.

For example: "GST has undoubtedly led to the creation of a unified national market,
eliminating the complexities of varying state taxes and facilitating smoother interstate trade.
This has reduced transportation times and costs, benefiting businesses engaged in inter-state
commerce. Additionally, the elimination of the cascading effect of taxes has lowered the
overall tax burden on many goods, making them more affordable for consumers."

11.2.2 Negative Impacts:

Provide a more detailed analysis of the negative impacts and challenges of GST, supporting
your points with evidence from your research.

For example: "Despite its benefits, GST has also presented significant challenges, particularly
for small businesses. The increased compliance burden, with the need for frequent and detailed
online filings, has strained their limited resources. The complexity of GST rules and
procedures, including intricate provisions for input tax credit and reverse charge mechanisms,
has led to confusion and errors. Furthermore, technical difficulties with the GST portal, such as
slow response times and system glitches, have added to their difficulties."

11.2.3 Overall Assessment:

Offer a more nuanced and detailed assessment of GST, considering both its positive and
negative impacts on the Indian economy and small businesses.

For example: "Overall, GST represents a significant step towards modernizing India's indirect
tax system and integrating the national market. While it has brought about greater efficiency
and transparency, its implementation has been challenging, especially for small businesses.
The long-term success of GST hinges on addressing these challenges, simplifying the system,
and providing adequate support to help small businesses adapt and thrive."

11.3 Recommendations and Future Outlook

Expand on your recommendations for improving GST, providing specific and actionable
suggestions.

For example:

"To simplify the rules, the government should consider reducing the number of tax slabs and
clarifying complex provisions related to input tax credit and exemptions."
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"To improve the technology, investment in upgrading the GST portal's infrastructure is
essential to ensure its reliability and speed. The development of a user-friendly mobile app
could also facilitate easier compliance for small businesses."

"To provide better support and training, the government should organize more workshops and
training programs for small businesses, and establish dedicated help centers to address their
queries and concerns."

Provide a more detailed discussion of the future outlook of GST, considering potential reforms
and their impact on the Indian economy.

For example: "The future of GST in India will likely involve further simplification, expansion
of its scope, and greater reliance on technology. These reforms have the potential to enhance its
effectiveness, reduce tax evasion, and promote economic growth. However, their success will
depend on the government's ability to address the concerns of small businesses and ensure a
smooth transition."

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12. Annexures (As needed)

12.1 Survey Questionnaire

Include the complete, final version of the survey questionnaire you used to collect data.

Formatting:

Use clear and consistent formatting. Number each question.

If using an online survey, provide a direct link. If that's not possible, include clear screenshots of
each page of the survey.

For each question, indicate the question type (e.g., multiple-choice, rating scale, open-ended).

Content:

Ensure all questions are age-appropriate, clear, concise, and unbiased. Avoid leading questions.

If you used any filter questions (e.g., "If yes, go to question 5"), clearly indicate the skip logic.

If the survey had sections (e.g., "Section 1: Demographics," "Section 2: GST Awareness"), use
headings to organize it.

Example:

Annexure 1: Survey Questionnaire

Section 1: Background Information

1. What is your age? (Multiple Choice)

a) Under 18

b) 18-25

c) 26-35

d) 36-45

e) Over 45

2. What is your gender?

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 a) Male

b) Female

c) Other

d) Prefer not to say

3. What is the highest level of education you have completed?

a) High School

b) Some College

c) College Degree

d) Graduate Degree

e) Other

Section 2: GST Awareness

4. Before GST was introduced, had you heard of it?

a) Yes

b) No

12.3 Other Relevant Documents

Include any other materials that are relevant to your project but not included in the main body of
the report. Here are some examples, with considerations for the word limit:

Detailed Data Tables:

If you have extensive raw data from your survey, you can include it here. However, focus on the
most important data that supports your findings. You might include summary tables in the main
report and the full data tables in the annexure.

Clearly label each table (e.g., "Table A1: Detailed Survey Results - Age and GST Awareness").

Provide a brief introduction explaining the contents of the table and how it relates to your
research.

Interview Transcripts/Summaries:

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If you conducted interviews, you could include full transcripts or, more likely given the word
limit, summarized key findings from the interviews.

If including summaries, organize them by interview question or theme.

Anonymize any personal information to protect the privacy of the interviewees.

Explain how the interviews were conducted and how the data was analyzed.

Sample Calculations:

If you performed any complex calculations (e.g., statistical analysis, economic modeling), you
can include the detailed steps here.

Clearly explain each step of the calculation and the formulas used.

Provide context for why the calculations were necessary and how they support your findings.

Glossary of Terms:

If your report uses technical terms related to GST, economics, or research methodology, include
a glossary defining those terms in simple language.

Organize the glossary alphabetically.

Provide clear and concise definitions.

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