Impact of GST on the Economic Growth of North Karnataka - A Study

Abstract

The introduction of the Goods and Services Tax in India on July 1, 2017, was a landmark step in the history of India’s indirect taxation. The GST integrated previously fragmented indirect taxes: entering tax, service tax, excise duty, and value-added tax, which reduced tax cascading, improved transparency, and assisted the economy in growing. This study assesses the effects of the Services Tax on the economy of North Karnataka, specifically the area of electrical goods and services in Hubballi-Dharwad, Belagavi, Kalaburagi, Ballari, Vijayapura, and Bidar. The primary data for this study were obtained from 50 members of the community from the fields of electrical goods and services, retail, and wholesale, as well as end consumers of electrical goods and services. The data collected states that 76% of the respondents agreed that GST had improved transparency, and 56% of the respondents reported increased sales. Secondary data for this study were obtained from published journals and articles, as well as government reports and publications from the GST Council. Percentage Analysis and Chi-Square Test were some of the statistical methods used in this study. The study shows that GST created some beneficial changes, such as transparency in business, interstate trade, North Karnataka tax compliance, and North Karnataka’s revenue. Small traders faced challenges such as the cost of compliance, the need to file compliance digitally, and the need for more working capital. The electrical products sector experienced some growth due to the same tax rates and the benefits of input tax credits. The research shows that the GST has improved the integration of markets in the region and formalized the economy. In semi-urban areas, small businesses need continuous awareness and easy compliance. The research also states that the GST has improved tax systems and the way business is done, which has created everlasting positive changes to the economy of North Karnataka, especially in the electrical products market. Future research can examine the long-term impact of GST on employment, investment, industrial development, MSMEs, and economic growth sector-wise throughout North-Karnataka. Comparative studies among districts and states may help identify regional differences. Further studies can also cover data regarding GST compliance, digitalization, revenue mobilization, and the effects of GST rate changes on the North Karnataka population.