Abstract
The study explores how Gujarat’s service sector MSME units are affected by GST. Direct and indirect taxes are the main sources of income for the Indian government; the latter has undergone substantial reform over time. An important turning point in India’s tax system was the implementation of the Goods and Services Tax (GST), which replaced a complex system of state and central levies with a single, cohesive framework. Beginning in 1986, the first efforts towards GST reform were followed by the submission of the Constitution Amendment Bill in 2011 and the recommendations of the Kelkar Task Force’s in 2000. The Constitution (122nd Amendment) Bill of 2014 was passed in spite of early opposition, opening the door for the implementation of GST on 1 July, 2017. Three parts make up the GST system, which is organised around the idea of “One Nation, One Tax”: The Central GST (CGST), State GST (SGST), and Integrated GST (IGST). Goods and services are subject to the tax, which is divided into four tax slabs: 5%, 12%, 18%, and 28%. Certain goods, such as those relating to gold and diamonds, are subject to lower taxes, while some necessities are exempted. For luxury and demerit goods, there is a compensating cess. The Union Finance Minister and members from each state and Union Territory make up the GST Council, which is crucial in determining tax rates, exemptions, and compliance procedures. Micro, Small, and Medium-Sized Enterprises (MSMEs) have benefited greatly from the new tax regime’s simplified compliance requirements, which include composition levy schemes, threshold exemptions, and quarterly GST return files. GST regulations must be followed by service sector MSMEs having a turnover of at least Rs. 20 lakhs (Rs. 10 lakhs for special category states). This paper examines the historical evolution of GST in India, its structural framework, and the economic impact on businesses, particularly MSMEs. By analysing the benefits and challenges associated with GST implementation, this study aims to provide insights into its role in promoting economic integration and simplifying tax compliance.
Keywords: Goods & Service Tax, Indirect Taxes, MSME, GST Council, Service Sector
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