Evaluating the Goods and Services Tax (GST) in the Context of Sustainable Development: Case Study of Manufacturing Firms

Abstract

Objectives: This study aims to examine the impact of the Goods and Services Tax (GST) on the Indian economy, focusing on its effects on compliance, revenue generation, and the challenges faced by small and medium-sized enterprises (SMEs) and the informal sector. Theoretical Framework: The research is grounded in tax reform theories, emphasizing the need for a simplified tax structure and the role of GST in enhancing economic efficiency and formalization of the informal sector. Method: A mixed-method approach was employed, combining a comprehensive literature review with primary data collected through surveys and interviews with stakeholders, including taxpayers, tax consultants, and government officials. Statistical methods, such as regression analysis, were utilized to analyse the data. Results and Discussion: The findings indicate that GST has led to increased government revenue and formalization of the informal sector, although it has also caused short-term disruptions for businesses. The study highlights the necessity for improved GST compliance mechanisms, user-friendly IT infrastructure, and educational initiatives to support SMEs in navigating the complexities of GST. Research Implications: The study underscores the importance of addressing compliance burdens and enhancing the GST framework to foster a more conducive environment for businesses, particularly in the informal sector. It calls for further research on the long-term effects of GST on various economic sectors. Originality/Value: This research contributes to the existing literature by providing empirical insights into the challenges and opportunities presented by GST in India, particularly from the perspective of SMEs and the informal sector, thereby offering valuable recommendations for policymakers and stakeholders.