THE IMPACT OF THE NEW GST REGIME ON MSMES IN INDIA, WITH A SPECIAL EMPHASIS ON INPUT TAX CREDIT

Abstract

This research examines the transformative impact of the Goods and Services Tax (GST) regime, with a particular focus on the Input Tax Credit (ITC) framework, offering new insights into its practical implications for businesses and the broader economy. While existing literature discusses both the GST and ITC, this study is unique in its comprehensive, real-world analysis of the challenges and opportunities organizations face when navigating the ITC system under the reformed tax structure. By employing a mixed-methods approach that combines the quantitative analysis of financial data with qualitative interviews, this research delves deeper into the experiences of businesses, highlighting both the advantages (such as streamlined processes and reduced tax burdens) and difficulties (such as obstacles in claiming ITC) faced by them. A key contribution of this study is its exploration of the interdependencies between technological infrastructure, administrative capabilities, and the regulatory environment, providing a nuanced understanding of how these factors collectively influence ITC utilization. Furthermore, the study advocates for the need for enhanced taxpayer education, policy refinement, and administrative simplification to unlock the full potential of the GST reforms. By shedding light on these under-explored aspects, the research offers novel perspectives on optimizing the ITC system, ensuring that it can better support businesses and drive the success of GST implementation.