Abstract
The Goods and Services Tax (GST) Act was implemented in India w.e.f. 1st July, 2017 by subsuming approximately 17 types of fragmented indirect taxes with aim to introduce ‘one nation one tax’ system, ‘ease tax compliance’ and provide ‘ease of doing business’ environment to the business entities. The primary objective of this study is to examine the impact of GST implementation on the operational efficiency and financial performance of MSMEs in Bihar through the lens of Institutional Theory Framework (ITF). However, the implementation challenges, technology adoption and government support are incorporated as the principal explanatory constructs influencing operational efficiency and financial performance, whereas demographic variables are used only to describe the characteristics of the sample collected for the study. Total 573 data were collected from MSME units working in different parts of Bihar using multistage sampling. Structural Equation Modelling (SEM) analysis was done through SmartPLS-4. The findings suggest that implementation of GST had a positive impact on the operational efficiency and financial performance of MSMEs in Bihar, except some difficulties faced during the transition stage. Training programmes, webinars, dissemination of information through government portals/websites, GST Suvidha-Kendras, boundary-less interstate trade and export, etc. have improved ease of doing business among MSMEs. Policymakers should focus on simplifying compliance procedures and avoid frequent regulatory changes so that uncertainty and administrative burden on MSMEs can be minimised and sustained long-term growth as well as financial stability can be extended to them.
Keywords: Financial Performance, Government Support, GST, Implementation Challenges, MSME, Operational Efficiency.