A Study on GST Post-Implementation Compliance Issues among MSMEs in Karnataka

Ease of compliance is always desirable to foster the growth of small businesses in India. Goods and Services Tax (GST) was introduced in India on 1st July 2018 to curb the limitations of earlier indirect tax laws. It has addressed many of the compliance issues faced by MSMEs in India such as the organization’s employee's cost increase after the implementation of GST, the increase in software cost, the increase in the working capital cost after the implementation of GST, Process is difficult, Cost of compliance is very high etc. However, still there are a lot of compliance issues that need urgent attention. This study aims to explore post-implementation compliance issues being faced by MSMEs with special reference to the state of Karnataka. Data has been collected through a survey questionnaire for 526 MSMEs and analyzed in this regard. To analyze this study we have implemented the Chi-Square test, Score Mean Analysis and Binary Logistic Regression. This study has found many teething problems regarding GST compliance being faced by MSMEs which is acting as a hurdle in their growth of MSMEs. There is an urgent need for policy interventions to improve cumbersome compliance procedures for the overall growth of the MSME sector in India.

MSMEs; GST; Compliances; Return; Registration; Input tax credit

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