Compliance Costs of GST for Small Business Enterprises in Tamil Nadu

S. Vishnuhadevi () and D. Hima Bindu ()
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S. Vishnuhadevi: PhD student, Department of Economics, Stella Maris College, Chennai
D. Hima Bindu: Associate Professor, Department of Economics, Stella Maris College, Chennai

Working Papers from Madras School of Economics,Chennai,India

Abstract: The main objective of this study is to examine the level of compliance burden through estimating the GST compliance costs incurred by the small businesses in Tamil Nadu. Further, to estimate the aggregate GST compliance costs incurred by the business in absolute terms and relative to Gross State Domestic Product (GSDP) and GST revenue of Tamil Nadu for the year 2019-20, and finally to identify the factors associated with the GST compliance costs using classical regression analysis. The results reveal that the overall weighed mean of the GST compliance costs is Rs. Rs. 32091 and the aggregate GST compliance costs is Rs. 17844 million which is around 0.10 percent and 4.65 percent of GSDP and GST revenue respectively. Further, the GST compliance costs incurred by the smallest firms is 1.45 percent of their annual turnover, and the same for largest firms it is only about 0.02 percent, which shows the regressive nature of the compliance costs as reported in the previous studies. Lastly, the regression results reveal that the volume of business, sector of the business, size of the business, firms with refund claims, and the manner with which the GST returns are completed are the important factors that are associated with the GST compliance costs incurred by the small businesses in Tamil Nadu.

Keywords: tax compliance costs; GST compliance costs; VAT compliance costs; small businesses; India; Tamil Nadu (search for similar items in EconPapers)
JEL-codes: H20 H25 H29 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2022-08
New Economics Papers: this item is included in nep-iue and nep-sbm
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