The Impact of GST on Indian SMES: A Financial Perspective

Abstract

India’s GST was implemented on July 1, 2017. It is one of the most historic tax reforms in the country. The GST being implemented to bring a single tax structure has affected businesses especially that of Small and Medium Enterprises (SME). This research study analyses the financial impact of GST on Indian SMEs. It analyses the compliance cost, cash flow management, profitability, and operational efficiency. The study will use a mixture of quantitative and qualitative methods. Quantitative data will be obtained from revenue records, financial statements and government and industry reports; qualitative data will be collected from open-ended responses obtained through interviews with the owners of and experts on SMEs. Research show that GST has streamlined tax processes and minimised cascading effect of tax lines it has increased compliance burden and working capital requirements for SMEs. Recommendations are provided based on the findings to help SMEs adapt to GST payment and reap benefits of GST.