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Compliance Costs of GST for Small Business Enterprises in Tamil Nadu

Author

Listed:
  • S. Vishnuhadevi

    (PhD student, Department of Economics, Stella Maris College, Chennai)

  • D. Hima Bindu

    (Associate Professor, Department of Economics, Stella Maris College, Chennai)

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.

Suggested Citation

  • S. Vishnuhadevi & D. Hima Bindu, 2022. "Compliance Costs of GST for Small Business Enterprises in Tamil Nadu," Working Papers 2022-229, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2022-229
    as

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    References listed on IDEAS

    as
    1. Cedric Sandford, 1981. "Book Review: Costs and Benefits of VAT," Fiscal Studies, Institute for Fiscal Studies, vol. 2(2), pages 61-62, July.
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    3. Tran-Nam, Binh & Evans, Chris & Walpole, Michael & Ritchie, Katherine, 2000. "Tax Compliance Costs: Research Methodology and Empirical Evidence from Australia," National Tax Journal, National Tax Association, vol. 53(n. 2), pages 229-52, June.
    4. Tran-Nam, Binh & Evans, Chris & Walpole, Michael & Ritchie, Katherine, 2000. "Tax Compliance Costs: Research Methodology and Empirical Evidence From Australia," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(2), pages 229-252, June.
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    More about this item

    Keywords

    tax compliance costs; GST compliance costs; VAT compliance costs; small businesses; India; Tamil Nadu;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other

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