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An Analytical Study on Perceptive Impact of Implementation of Goods and

Services Tax (GST) An Analytical Study on Perceptive Impact of Implementation
of Goods and Services Tax (GST...

Conference Paper · June 2018

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Viraj Dhakan Yagnesh Mohan Dalvadi

Centre for Operations, Research and Training Sardar Patel University
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An Analytical Study on Perceptive Impact of
Implementation of Goods and Services Tax
(GST)
CA Viraj Dhakan
Research scholar,
Department of Business Studies at Sardar Patel University, Vallabh Vidyanagar, Gujarat.
[email protected]
(M) – 9033628826

Dr Y M Dalvadi
Professor,
Department of Business Studies at Sardar Patel University, VallabhVidyanagar, Gujarat.
[email protected]
(M): 9428799455
 An Analytical Study on Perceptive Impact
of Implementation of Goods and Services
Tax (GST)
Abstract- Recently implemented Goods and Services Tax in India has affected a lot
many industries and indirectly daily lives of Public at large. Replacing existing
indirect taxes such as Excise, Service Tax and state Value Added Taxes, GST has
covered under its ambit all the goods and services that were previously taxed at
almost same or increased rates. The drastic change has impacted a lot not only
financially and operationally but also perceptively and emotionally. The research
paper tries to discover the perceptive impact of Implementation of GST in India. The
study was carried out utilising a structured questionnaire of19 questions seeking
responses for impact and change in viewpoint or lookout of respondents.
Questionnaire included questions relating to transition. Corruption level, GDP,
revenue generation, compliances, and readiness of public at large, results expected
etc. The respondents included Chartered Accountants, Company Secretaries,
Advocates, Businessmen, Service persons and students. The study reveals that the
acute step of Government to introduce and implement the new tax model was
expected. Overall opinion of the respondents show that they are very positive for the
impact of GST implementation. Major industries will have positive impact due to
introduction of GST. Whereas only few industries are expected to have negative
impact thereby
Key Words – Goods and Services Tax, GST, Perceptive Impact, Implementation
of GST.

Page 1 of 12 
 
 An Analytical Study on Perceptive Impact
of Implementation of Goods and Services
Tax (GST)
Introduction
"Taxation should not be a painful process for the people. There should be leniency
and caution while deciding the tax structure. Ideally, governments should collect taxes
like a honeybee, which sucks just the right amount of honey from the flower so that
both can survive. Taxes should be collected in small and not in large proportions." –
Arthashastra
The above statement from Arthashastra very precisely defines the principles of
taxation that Government of any country shall bear in mind while levying or changing
any taxation structures. The metamorphosis of indirect tax structure that the country
witnessed in the recent past is once in a century like phenomenon for any country.
The implementation of GST in India has transformed lives and perception of public at
large in the nation. The sudden and dramatic change in the system led many to think
that Government is very stiff over structural makeovers in view of the betterment and
advancement of the country’s economy. One nation one tax agenda has been
implemented through the introduction of Goods and Services tax by replacing Excise,
Service Tax and state Value Added Taxes.

Literature Review
BarhateG H (2017) has studied that the lack of information coupled with the apathy
towards reforms may paralyze the speedy implementation of this system especially in
small towns where still not a single orientation programs have been planned and
executed till date by competent authorities. The association of business turnover with
the apprehensions can be issue worth considering when designing training programs
and modules. In lien of this it is suggested associations, NGO’s should come forward
to organize such programs at town level to orient small traders so that nobody is left
out of this biggest tax reform in the country.
Poonam(2017)The biggest problems in Indian tax system like Cascading effect & tax
evasion, distortion can be minimized by implementing GST. A single rate would help
to maintain simplicity and transparency by treating all goods and services as equal
without giving special treatment to some ‘special’ goods and/or services. The launch
of GST would transform Asia’s third largest economy into a single market for the first
time.
Shakdwipee(2017)in his paper inquring the level of awareness towards GST among
the small business owners in Rajasthan state, found that the main areas to be focused
include Training errors and Computer software availability.

Page 2 of 12 
 
AhmadM A R (2016) in his seminal work regarding “Introducing the GST in
Malaysia” stated that government should have careful planning, detailed preparation,
participation of community and extensive public education program is the key success
in the implementation of GST for any country.

Research Gap
Review of literature shows reveals that studies conducted on various aspects of GST
but none of the had tried to study the Perceptive Impact of the Implementation of
GST. Markets in India are sentimental and impact driven, which in turn leads the
researchers to think that negative impact of GST introduction may cause reduction or
downfall in confidence of investors and businessmen in capacity of markets to
maintain the growth rates. Thus it is important to study the perceptive impact of
implementation of GST that in-turn may throw on future prospects of markets.

Objective of the Study

1. To study opinion on Government’s implementation strategies regarding GST.
2. To measure awareness of GST among selected respondents.
3. To analyse perceptive impact of GST and public expectations from
Government.

Research Methodology
The study aims at finding the perceptive impact of implementation of GST among
different classes of industry people which are affected by the changeover of tax
structure in the country. The study is Descriptive in nature. The study was carried out
utilizing a structured questionnaire being sent hard copies to respondents and
researcher has extensively used the services of Google Docs for collection responses
online. The major target respondents were those who were aware of the GST laws,
rules and regulations to an extent to form an actionable opinion. Chartered
Accountants, Company Secretaries, Advocates, Businessmen, Service persons and
students pursuing professional studies were considered eligible. In total 166 responses
were received over a period of around 2 months and after scrutinising four responses
were incomplete so it was discarded and finally analysis done on 162 responses. The
purposive sampling technique has been used to select samples.
Various analysis were made on the data so provided by the respondents and concrete
stands emerged that displayed how and to what extent GST implementation has
affected people and what perceptive impact it has created. IBM SPSS Statistics 20
(Demo version) was utilized as analysis tool.

Demographic Information
The following questions formed part of questionnaire and On detail analysis of the
data and study thereafter the following results have emerged,

Page 3 of 12 
 
 Table -1 Demographic Information

Category Variable Frequency Percentage

f %
Age Group 20-25 Years 49 30.2
26-30 Years 62 38.3
31-35 Years 17 10.5
36-40 Years 13 8.0
41-50 Years 14 8.6
51 and above years 7 4.3
Total 162 100.0
Gender Female 48 29.6
Male 114 70.4
Total 162 100.0
Profession Business 18 11.1
Professional 78 48.1
Service 44 27.2
Student 22 13.6
Total 162 100.0
Since when they knew of During last 6 months 39 24.1
GST Before 6 months 17 10.5
implementation in India Before 1 year 53 32.7
Before 2 years 53 32.7
Total 162 100.0

Majority of respondents are of young age i.e. belonging to age group of 20-
30.Majority knew that GST was to be implemented in India before 1 year from
implementation date. This might also mean that they did not had enough time to get
well equipped with knowledge and skills required for complying with regulations
since Government had no provided with skeleton or master guidelines for compliance
requirements and procedural modifications.

Page 4 of 12 
 
PERCEPTION ON GST OF SELECTED RESPONDENTS
Opinion on How much time did Government provide for getting ready for GST?
Only 28.4% respondents felt that fair enough time was given to country by the
Government to get ready for such a significant makeover.
Table - 2

Frequency Percent
Very less 17 10.5
Less 40 24.7
Moderate 55 34.0
Fair Enough 46 28.4
Ample 4 2.5
Total 162 100.0

Perception as to, to what extent Governments and its departments were

prepared for GST implementation and complete functioning thereafter? Majority
believed that even Government was not prepared well for the huge implementation.
Table - 3

Frequency Percent
Absolutely prepared 5 3.1
Very much prepared 40 24.7
Not so prepared 89 54.9
Not at all prepared 18 11.1
Not known 10 6.2
Total 162 100.0

When asked for, how stringent are the laws with regards to GST?Almost more
than majority took a stand that law of GST is more stringent then the erstwhile ones.
Table - 4

Frequency Percent
Very stringent 11 6.8
Stringent 80 49.4
At par with existing laws 35 21.6
Liberal than existing laws 18 11.1
Not Known 18 11.1
Total 162 100.0

Page 5 of 12 
 
Is our country is ready to adapt to such a drastic makeovers of indirect taxation
structure?
Table - 5

Frequency Percent
Yes 97 59.9
No 65 40.1
Total 162 100.0

MEASURING AWARENESS OF GST AMONG SELECTED RESPONDENTS

Testing awareness of respondents as how many returns a businessman will have
to file annually for a single registration?1/5th of educated people are not aware as to
how to comply with the recently introduced law and remaining majority are
misguided or driven by rumours and only 20.4% knew the correct position of law as
on the stage of being law implemented on 1st of July 2017.
Table - 6

Frequency Percent
One monthly and one annually 31 19.1
37 returns annually 65 40.1
4 parts of a return monthly and one annually 33 20.4
Not known 33 20.4
Total 162 100.0

Government and its top rank officials were successful in positioning probable
advantages of new model of taxation in the country, but they were very much failure
in explaining and conveying the procedure and return filing requirements to those
who are to implement the tax regime in the country i.e. professionals and tax
practitioner also. As a result, rumours have taken speed and grip among people that
they have to file 37 returns annually. To address this issue, Revenue Secretary,
Dr.Hasmukh Adhia had to repeatedly include in his speeches that business persons do
not have to file 37 returns annually, instead there were 4 parts of one return monthly
and one annual return.

Page 6 of 12 
 
ANALYSING PERCEPTIVE IMPACT
Impact on Various Industries
Table - 7

Industry Positive Negative Neutral Not Aware

% % % %
Banking / Finance 46.3 17.9 19.1 16.7
Oil and Gas 32.1 16.7 25.3 25.9
Information Technology 46.9 21.6 11.1 20.4
Automotive 46.9 25.3 9.9 17.9
Gems and Jewellery 30.9 45.1 8.6 15.4
Pharmaceuticals 44.4 24.7 14.2 16.7
Engineering / Manufacturing 46.3 22.8 13.6 17.3
Telecom 32.7 31.5 15.4 20.4
Construction / Real Estate 43.8 38.9 4.9 12.3
Chemicals 37.0 21.6 11.7 29.6
Media 37.0 19.1 13.6 30.2
Textile 34.6 38.9 6.8 19.8
Aviation and Hospitality 36.4 30.9 11.7 21.0
Cement and Steel 42.0 26.5 9.3 22.2
FMCG 51.2 18.5 7.4 22.8
Consumer Durables 48.1 25.3 10.5 16.0
Average 41.0 26.6 12.1 20.3
Only Gems and Jewellery and Textiles industry is opined to have negative impact
whereas other all industries will have positive impact as per views of the respondents.

Has the transition period has hampered businesses?

Table - 8

Frequency Percent
Yes 102 63.0
No 35 21.6
Not Aware 25 15.4
Total 162 100.0

Page 7 of 12 
 
When asked for How likely is the present model and laws under GST regime for
respondent's industry?
Table - 9

Frequency Percent
Very likely 14 8.6
Likely 64 39.5
Moderate 65 40.1
Unlikely 14 8.6
Very Unlikely 5 3.1
Total 162 100.0

OPINION ON GOVERNMENT’S IMPLEMENTATION STRATEGIES

REGARDING GST
Goods and services will be cheaper after implementation of GST?As the
advertised benefits of the GST stated that goods and services will be cheaper due to
single tax, yet majority respondents believe that the situation in the country is to
remain the same.
Table - 10

Frequency Percent
Very strongly 12 7.4
Strongly 35 21.6
Moderate 79 48.8
Unlikely 27 16.7
Very unlikely 9 5.6
Total 162 100.0

Whether compliance will be discouraged due to GST implementation or not?

Compliance will increase but it will not be discouraged as projected by the
Government is also reflected in the opinion of the respondents here.
Table - 11

Frequency Percent
Yes 43 26.5
No 119 73.5
Total 162 100.0

Page 8 of 12 
 
What will be impact of GST implementation on GDP of India thereafter? GDP is
assumed to increase even though transition and implementation phases has affected
almost 2 quarters’ revenues.
Table - 12

Frequency Percent
Exponential increase 7 4.3
Increase 106 65.4
No change 28 17.3
Decrease 20 12.3
Exponential decrease 1 .6
Total 162 100.0

Will GST implementation and compliance thereafter will cause sort of recession
for next 1 or 2 years?
Table - 13

Frequency Percent
Yes 71 43.8
No 91 56.2
Total 162 100.0

What would be the probable impact of GST implementation on corruption?

Being all the compliances and procedures online over the internet,majority of the
respondents believe that corruption will be reduced as projected by the proposed
benefits of GST at the time of introduction.
Table - 14

Frequency Percent
Increase 35 21.6
Decrease 88 54.3
No Change 28 17.3
Not aware 11 6.8
Total 162 100.0

Page 9 of 12 
 
As per respondent's belief, how would be GST's probable impact on revenue
generation of all the Governments as one? Almost 3/4th of majority responded that
Government’s revenue generation will increase undoubtedly and simultaneously GDP
is also supposed to increase as per the belief of our respondents.
Table - 15

Frequency Percent
Positive 120 74.1
Negative 10 6.2
Neutral 17 10.5
Not Aware 15 9.3
Total 162 100.0

Does the respondent believe that if available, people will refer to buy goods /
services without bill / invoice in order to avoid tax? Almost equal respondents are
distributed among yes and no for the opinion that whether unaccounted transactions
will take plane and compliance will be discouraged or not.
Table - 16

Frequency Percent
Yes 61 37.7
No 59 36.4
Maybe 42 25.9
Total 162 100.0

ANALYSING PUBLIC’S EXPECTATION FROM GOVERNMENT AND ITS

POLICIES
Respondent believed that Government / GST council should reduce the depth of
penetration of tax ambit to the most unorganized, micro and small sectors
Table - 17

Frequency Percent
Yes 100 61.7
No 62 38.3
Total 162 100.0
Government shall reduce the depth of penetration of tax ambit to unorganised sectors.
This has two interpretations that either tax planners wish to earth the transactions via
unorganised sectors or other interpretations implies that small segments should not be
overburdened with high compliance costs being the sector where collection cost for
revenue departments is higher as compared to collections.

Page 10 of 12 
 
More products and services should be brought under tax net?
Table - 18

Frequency Percent
Yes 70 43.2
No 39 24.1
Maybe 53 32.7
Total 162 100.0

FINDINGS OF THE STUDY

 Approximately 35% respondents believed that Government has given less or

very less time for getting ready for GST and 65% also believe that
Government was no so prepared for GST implementation, out of which 70%
were professionals. Moreover, 55% respondents feels that law of GST is more
stringent than existing laws that it superseded. However, 60% respondents
believed that India is ready to adopt such drastic makeover of Indirect Tax
Structure.
 Surprisingly, only 20% respondents are aware of correct law position, though
48% were professionals in total respondents.
 Analysing perceptive impact of respondents’ views emerged that gems and
jewellery industry and textile industry are supposed to have negative effect
due to GST implementation. Whereas other all industries given for opinion
were supposed to have positive impact as per respondents’ belief. Also,
majority of them have taken a view that GST has hampered business during
transition time. But at the same time 48% opined that the new tax structure is
favourable to their respective industries.
 Only 29% respondents could take a stand to opine that goods and services will
be cheaper after implementation of GST replacing many other existing taxes
and cesses. Yet 74% stated that compliance will not be discouraged though
more procedural activates has been added due to GST implementation.
Meaning thereby that either compliance is simple or its repercussions of non-
compliances are very stiff, stringent and attract very heavy penalties.
 GDP is supposed to increase as believed by majority and also they believed
that this turnaround and system changeover will not bring any sort of recession
in coming years. Due to least human intervention, corruption is expected to
decrease by 54% which is also one of the advertised and probable benefit of
GST. 3/4th majority agrees that Governments’ revenue generation will have a
positive impact of GST.
 Due to higher tax burdens as compared to existing axes, 38% respondents
have been believing that if available, people will opt to buy goods and services
without bill / invoice etc. Meaning thereby, tax evasion is ought to be a
consequence of GST implementation.

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  Public expectations are such thatGST Council / Government should reduce the
depth of penetration of tax ambit to the most unorganised, micro and small
sectors, i.e. reach of Reverse Charge Mechanism should be reduced. A
marginal relief of purchase from unregistered seller upto Rs. 5000/- per day
has been exempted as of now. On the contrary public has also to opine that
more goods and services should be brought under tax bracket so as to reduce
the burden from high taxed goods and services expanding the tax base and not
the rate.

CONCLUSION
Overall and keen observation leads researcher to a conclusion that Government has
been absolutely excellent in projecting the probable advantages of “One Nation One
Tax” concept by way of imposing GST and replacing existing many charges, cesses
and taxes. On the contrary, they have been a failure to showcase the readiness for
taking the call of “huge nation huge reforms” need.
There is a feeling that Government was not so prepared for GST and time given was
very short. However, respondents believed that it will not bring recession and
Government revenue will increase. Overall businesses were hampered during
transition period. Respondents also beloved that after implementation of GST, goods
and services will be cheaper and more and more businesses will comply with GST
rules. Due to higher GST rates people will opt to buy goods and services without bill /
invoice and it will lead to tax evasion. Public expects that Government should reduce
coverage of Reverse Charge Mechanism.
Even the amendments to rates and rules on 6th October 2017 clearly displays that GST
Council/Government’s rates and policies were not accepted initially and because of
agitations and oppositions they had to reframe the policies and rates. Apparent from
the changes and non-acceptance, Government has evidenced the “trial and error”
approach without understanding the tax bearing capacities and ignoring the crucial
key points in successful implementation of tax reform called GST.

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