With the objective of revolutionizing the Indian taxation system GST (Goods & Service Tax) Law was passed in Lok Sabha on 29^th March, 2017 and came into effect from 1^st July, 2017. GST Law have replaced many indirect tax laws and under new GST regime, tax will be levied at every point of sale.

However, more than 86 percent or 395 million worked in unorganized sector ⁽¹⁾ which were directly influenced by GST. Additionally, even the laws for GST are changing, creating lots of confusion among businesses, people and even to government. ⁽²⁾ In most places people were protesting against GST by closing shops and other business establishments. According to former Indian Finance Minister, P. Chidambaram, “Micro, Small and Medium Scale will suffer huge losses”. ⁽³⁾

As problems arises for small unorganized traders because most of the transactions are made through cash ⁽⁴⁾ and they still can’t recover from the impact of last year’s demonetization. ^{(5) (6) (7)} GST have further added losses to their business. ⁽⁸⁾

Even small shopkeepers and traders were struggling in creating different invoices for GST rates. GST have created burden among them since they have various items with different GST categories which were creating lots of confusions. ^{(9) (10)} At last, the procedure for filling GST returns were still in mist. ⁽¹¹⁾ They have to take help from financial advisor or charter accountant which is non-economical.

GST incurs varieties of taxes which sometimes creates lots of confusion not only among customers but also to business owners. ⁽¹²⁾ Also, GST were still not implemented completely in every business around the country. The price of some products was changing according to the different locations. ⁽¹⁰⁾ In this situation, small business owners were charging prices of the products more than MRP, ⁽¹³⁾ while some were collecting GST fees more than as mentioned by government which creates lots of dissatisfaction among people. ⁽¹⁴⁾

Some small traders or businesses were unable to afford the cost of accountants or financial advisors and computers etc. ⁽¹⁵⁾ Some of small business owners were illiterate and therefore unable to undergo business paperwork. ⁽¹⁶⁾ There was still not relief for small businesses with low annual turnover who have been exempted from GST ⁽¹⁷⁾ as they have no proof that they were been exempted from GST.

Responses from 255 managers from 133 micro (less than 25 lakhs turnover annually) and 92 small (25 lakhs to less than 2 crores turnover annually) organizations in Kolkata, West Bengal from 18^th June to 11^th Aug. 2017 were been collected to find out whether GST brought any financial confusion and burden in their business or not.

Table 1: Distribution of responses.

Diagram 1: Distribution of responses.

Study suggests that 191 (84.89 percent) out of 225 said that GST have brought lots of financial burden to their business. 119 (89.47 percent) respondents from micro organization have too unwelcomed GST. Only 21.74 percent from small organization have responded that GST may bring opportunities for their business. Some respondents were also afraid about for rapid changing in GST rates rapidly within short period of time by government, would hamper their existence business. Most respondents from micro organization still prefer cash as a medium of business transaction due to online frauds.

In this roller-coaster situation many traders were still buying unregistered products in cash without invoices and without paying any taxes. It seems in spite of government’s promotion for taking India towards cashless economy, common public still prefer cash transaction. ⁽¹⁸⁾

References:

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