Awareness of GST Provisions among Local Business Owners: Evidence from an Empirical Study

Abstract

One of the biggest reforms to India’s tax system is the implementation of the Goods and Services Tax (GST). Simplification and transparency of the tax system are the goals of the GST, but micro business owners would argue the most important part of the GST is understanding how it works. Even after the GST has been implemented for multiple years, small businesses, especially in rural and semi urban areas, still struggle with not just understanding how GST works, but also how to apply it. This study attempts to fill that gap. The main purpose of this study is to determine if certain variables, including gender, business type, location, experience, etc., assist in determining how GST is understood by business owners. Data for analysis was collected when 307 GST registered micro-entrepreneurs were surveyed. The collected data was analyzed with the help of statistical tools. Lack of understanding of GST exists, and it is not uncommon, but the study found that the understanding of GST is not as affected by gender. Understanding and experience of GST is still reliant on business location. Businesses in rural areas have less understanding and experience with GST compared to their urban counterparts. Understanding of GST is almost intuitive and so the authors of the study recommend that any future studies should attempt to deliver the benefits of the GST to rural entrepreneurs, especially those with less experience, by developing access to resources to teach GST to rural entrepreneurs and providing hands-on aid to rural entrepreneurs with GST.