Evaluating The Effectiveness Of Goods And Services Tax (GST) On Small And Medium Enterprises (Smes): A Case Study Approach

Abstract

This research work focuses on the effects of implementing the Goods and Services Tax (GST) on Small and Medium Enterprises (SMEs) in India which is explained in two cases. The idea of implementing GST was to replace many indirect taxes at once and make the tax process less complicated however the implementation of the act was not barrier-free; especially for SMEs. The research undertaken about four small cross-sectional enterprises namely, Hero Cycles Ltd., Croma Retail, Dabur India Ltd. SME division, and Organic India Pvt. Ltd. reveals broad tendencies and sectorial effects. This therefore means that while smaller firms as in the case of Orient Craft struggled to adapt to GST, larger well-established firms such as Hero Cycles and Dabur India were better placed to optimize the available resources to enhance efficiency. While it was manageable for large players, small-scale industries especially organic India had lots of compliance issues which led to higher operational costs, loss of revenue and cash flow problems. The study stands to show that while GST holds the promise of boosting competitiveness and work effectiveness the prospects are further opened to larger, and better-prepared organizations. The study highlights the factors of tapping technology, training the employees, and seeking external assistance for SMEs to overcome the issues related to GST. Also existing was disparity by industry, where changes in manufacturing and retail-related industries occurred with less interruption than in agriculture-dependent industries. Therefore the study concludes that GST has been more or less a successful tax reform depending on the size of the firm, industry and the ability to transition to the new system, there is therefore need to support the smaller firms in their transition to the new system.