GST REFORMS AND STRUCTURAL CHANGES IN MSME COST, PRICING AND COMPETITIVENESS

Abstract

The implementation of the Goods and Services Tax (GST) in India marked one of the most significant indirect tax reforms aimed at creating a unified national market, improving tax compliance, and enhancing business efficiency. Micro, Small and Medium Enterprises (MSMEs), which contribute substantially to India's gross domestic product, manufacturing output, exports, and employment, have experienced considerable changes in their operational environment following the introduction of GST. This study examines the influence of GST reforms on the cost structures, pricing strategies, and competitiveness of MSMEs in Chitradurga District of Karnataka. The study also investigates the challenges encountered by enterprises in adapting to the GST regime and identifies policy measures that can strengthen MSME performance. The research adopts a descriptive research design using both primary and secondary data. Primary data are collected from MSME owners and managers through a structured questionnaire, while secondary data are obtained from government publications, the Ministry of MSME, the GST Council, the Reserve Bank of India, the National Statistical Office, and published scholarly literature. Descriptive statistical techniques are employed to analyse the data. The study discusses the impact of GST on production costs, input tax credit utilisation, compliance expenditure, pricing decisions, market expansion, and business competitiveness. It further highlights the opportunities created through formalisation, digitalisation, and improved supply chain efficiency while recognising continuing concerns relating to compliance costs, refund delays, and working capital management. The findings are expected to provide useful insights for policymakers, tax administrators, and MSME entrepreneurs in improving the effectiveness of GST reforms and strengthening the contribution of MSMEs to sustainable economic development.