a study of perception of taxpayers towards gst …icmrr.org/global/pdffiles/ijfrr/f201709005.pdf ·...

A STUDY OF PERCEPTION OF TAXPAYERS TOWARDS GST WITH

REFERENCE TO MADHYA PRADESH

* PREETI SINGH CHOUHAN ** Dr. SWARANJEET ARORA

*** Dr.SACHIN MITTAL

*Assistant Professor, Shushila Devi Bansal College of Engineering. Indore. Contact Address: 83

Brahmbag colony Marimata square, Indore (M.P.) 452006.

** Associate Professor, Prestige Institute of Management and Research, Indore. Contact Address: 503

Vishnu Puri Anex. , Indore (M.P.)

*** Assistant Professor, Jaipuria Institute of Management, Indore Contact Address: 233 Goyal nagar,

Indore, (M.P.) 452016.

ABSTRACT

Taxation plays a significant and important role in the process of advancement and growth of the

country. Tax reform is the process of varying the way taxes are composed or managed by the

government .The objective of the present study is to identify factors affecting the perception of the

taxpayers, towards Goods and Service Tax with reference to Madhya Pradesh and to locate the issues

and differences in the perception. The study is based on the primary data collected from the taxpayers

(Wholesalers, retailers, tax practitioners and chartered accountants) of different cities of Madhya

Pradesh by the means of questionnaire. It is found that the perception of the taxpayers regarding the

returns and assessment aspect is affected by some factors and their perception varies on some aspects.

Findings of the study are expected to serve as a guide and help government in making policies by

understanding the perception of the tax payers.

Keywords: Tax Return, Assessment, GST, Value Added Tax, VAT, Taxpayer.

INTRODUCTION

Indian taxation system has undergone through set of reforms during the previous decade and is still

continuing the process through advent of goods and service tax system. The tax rates have been

updated and tax laws have been changed resulting in improved compliance, ease of tax payment and

better enforcement. The Goods and Services Tax (GST) is a value added tax that directly affects every

sector and sections of our economy. A number of countries implemented this tax system followed by

France, the first country introduced GST. A new story of VAT is Goods and service tax which gives

an extensive setoff for input tax credit and subsuming many indirect taxes from national level and

state. India is a centralized self-governing country and therefore the GST is implemented parallel by

the central and state governments as CGST and SGST correspondingly. At the Central and the State

level implementation of the Value Added Tax (VAT) has been considered to be a most important step

– an essential step forward – in the globe of indirect tax reforms in India. At the national level if the

VAT is a key improvement over the pre-existing Central excise duty and the sales tax system at the

State level, then the Goods and Services Tax (GST) is definitely an additional important perfection,

the next rational step, in the direction of an extensive indirect tax reforms in the country.

In some form almost 150 countries have introduced GST. While countries such as Indonesia has five

positive rates, a zero rate and over 30 categories of exemptions New Zealand and Singapore tax

INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH REVIEWISSN:2321-0354 - ONLINE ISSN:2347-1654 - PRINT - IMPACT FACTOR:4.236VOLUME 5, ISSUE 9 SEPTEMBER 2017

An Open Access, Peer Reviewed, Refereed, Online and Print International Research Journalwww.icmrr.org 32 [email protected]

virtually everything at a single rate, GST applies only to goods and the provision of repairs,

replacement and processing services in China

GST model

1. CGST – Central goods and service tax for levied by central Govt.

2. SGST – State goods and service tax levied by state Govt.

3. IGST or integrated GST to be collected by the central government

A sale transaction within the state will have 2 taxes. SGST, CGST.A sale transaction within the

outside the state i.e. sales from one state to another will have a single tax IGST. The GST is

introduced not only to get rid of the past patch work of indirect taxes that were partial and suffer

from infirmities ,mostly exemption and multiple rates but also to improve tax compliance. Tax

compliance takes place through filing tax returns so complications are related with it only , this study

tried to explore the perceptions of Wholesalers, Retailers, Chartered Accountants, and Tax

practitioners towards GST and tried to get answer of the following questions, Are they satisfied with

current vat structure, they are ready to accept GST in place of VAT.

LITRATURE REVIEW

Rastogi et. al, ( 2009) explained the exclusive structure of India‟s Constitution comprising the Union

Government at the Centre and the State Governments in the different Indian states has created a

complex and multi-layered system of consumption taxes. Under this Constitution, Central

Government is empowered to impose excise duties on the production or manufacture of goods and

service taxes on the provision of services. The Central Government can also empower and regulate

imposition of taxes on interstate sales of goods. Conversely such taxes may be levied or collected by

the states.

Kasinath,S. (2016) stated in his paper Article that The Union Finance Minister of India Sri Arun

Jaitely spoke about the fiscal policy ,in the Union Budget in Parliament in 2016. The Finance bill

approved by President of India will become Finance Act .The direct tax to GDP ratio has gone up

substantially during the above study period. In the end there are few suggestions made to the

Government in the interest of taxpayers. The fiscal policy encompasses the Direct and Indirect Taxes.

Raghuram and Deepa (2015) studied the process of introducing the Goods and Services Tax (GST),

bringing out the perspectives of different stakeholders and the contentious issues. The GST was

expected to subsume a variety of taxes and simplify the indirect tax regime. The Empowered

Committee (EC) was mandated in 2007, to bring about consensus among the States to move towards

GST. The important stakeholders in the process were the Government of India (GOI), individual

States, industry and the committees commissioned by the GOI or EC. However, the EC faced

challenges since there were issues of control between the Centre and States, perceived loss of revenue

by some States, extent of uniformity across various commodities and their tax rates, input credit

mechanism and dispute settlement. The deadline for the introduction of GST kept getting postponed

due to the slow resolution of the challenging issues. Finally, it was tabled in the Parliament as the

122nd Constitutional Amendment Bill (CAB) in December 2014.

Garg, G. (2014) Studied Basic Concepts and Features of Good and Service Tax in India, and found

that GST is the most logical steps towards the comprehensive indirect tax reform in our country since

independence. GST will create a single, unified Indian market to make the economy stronger. Experts

say that GST is likely to improve tax collections and Boost India‟s economic development by



breaking tax barriers between States and integrating India through a uniform tax rate. Under GST, the

taxation burden will be divided equitably between manufacturing and services, through a lower tax

rate by increasing the tax base and minimizing exemptions.

Taqvi et. al, (2013) revealed that the Goods and Services Tax (GST) is a value added tax to be

implemented in India, the decision on which is pending. GST is the only indirect tax that directly

affects all sectors and sections of our economy Therefore; we all need to learn it whether willingly or

as compulsion. The goods and services tax (GST) is aimed at creating a single, unified market that

will benefit both corporate and the economy. The changed indirect tax system, GST-Goods and

service tax is planned to execute in India.

Vasanthagopal,R. (2011) Studied “GST in India: A Big Leap in the Indirect Taxation System”, and

found that the positive impacts are dependent on a neutral and rational design of the GST, balancing

the conflicting interests of various stakeholders, full political commitment for a fundamental tax

reform with a constitutional amendment, the switchover to a „flawless‟ GST would be a big leap in

the indirect taxation system and also give a new impetus to India‟s economic change. It is also noted

that, buoyed by the success of GST, more than 140 countries have introduced GST in some form to

other and is fast becoming the preferred form of indirect tax in the Asia Pacific region

Research Methodology

The Study

The present investigation is based on exploratory research inquiry and examines the tax payer‟s

perception in Indore region.

The Sample

For this study the data was collected from 250 vat payers of Madhya Pradesh of India. The sample

of 250 respondents of VAT payers was selected at random from different cities of Madhya Pradesh of

India such as Indore, Bhopal and Jabalpur. Out of these 250 respondents (16 respondents age were

less than 30; 45 respondents from age group of 30- 40 years; 101 from age group of 40-50 years and

88 respondents age were above 50 years). 180 respondents were male and 70 female. 26 respondents

were MBA; 58 M.com; 109 chartered accountants and 56 respondents were holding different degrees

as B.com, BBA etc. 81 respondents were wholesalers; 48 retailers; 24 tax practitioners and 97

respondents were chartered accountant. 50 respondents experience was less than 5 years; 93 were

between 5 to 10 years; 65 were between 10 to 15 and 42 have experience of above 15 years. The study

is made with particular reference to Madhya Pradesh Value Added Tax. Here the term taxpayer has

been used to include those who have tax payment experiences. These include those who have the

experience of tax payment at the tax office on their own, who are traders, and those who have the

experience of tax payment on behalf of the others and the clients who are professional accountants.

The respondents were selected through convenient sampling.

Tools for Data Collection

The study is based on primary data that is collected through the use of a questionnaire. As this

research has a quantitative base so questionnaire used in this research is close ended questionnaire.

The research instrument comprises of number of statements under one macro statement (variable). It

includes perception of different types of tax payers toward tax reform. Respondents were asked to

indicate their degree of agreement with each of the questions on a five-point Likert scale. In this study



the reliability of the scales was first evaluated using Cronbach‟s alpha, which measures the

consistency with which respondents answer questions within a scale. The period of data collection for

the present research ranged from 15 December 2015 to 5 may 2016. .

Tools for Data Analysis

In the present study factors analysis and one way ANOVA test were applied using SPSS.

Item Total Correlation and Reliability of the Measures

Reliability of the measures was assessed with the use of Cronbach‟s alpha on all items. Cronbach‟s

alpha allows us to measure the reliability of different variables. It consists of estimates of how much

variation in scores of different variables is attributable to chance or random errors (Selltiz et al.,

1976). As a general rule, a coefficient greater than or equal to 0.7 is considered acceptable and a good

indication of construct reliability (Nunnally, 1978). Cronbach‟s alpha is .811. Hence, it was found

reliable for further analysis

TABLE 1:RELIABILITY STATISTICS

Cronbach's Alpha Cronbach's Alpha

Based on

Standardized Items

N of Items

.804 .811 8

OBJECTIVE

To explore the perceptions of Wholesalers, Retailers, Chartered Accountants, and Tax officials

towards Goods and Service tax with special reference to Madhya Pradesh.

HYPOTHESES

H01 -There is no significant difference in the opinion of Value Added tax payers (Wholesalers,

Retailers, Chartered Accountants, and Tax officials) towards GST with respect to their experience

RESULTS AND DISCUSSION

To test the correlation among all the variables in the population under study, Kaiser-Meyer-Olkin

(KMO) measure of sampling adequacy and the Bartlett‟s test of sphericity were performed

TABLE 2: RESULT OF THE KMO AND BARTLETT'S TEST FOR VAT PAYERS

TOWARDS GST

KMO AND BARTLETT'S TEST

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy. .802

Bartlett's Test of

Sphericity

Approx. Chi-Square 325.030

df 6

Sig. .000

To test the correlation among all the variables in the population under study, Kaiser-Meyer-Olkin

(KMO) measure of sampling adequacy and the Bartlett‟s test of sphericity were performed The



generated score of KMO was .802 reasonably supporting the appropriateness of using factor analysis.

The generated score of KMO was .802, reasonably supporting the appropriateness of using factor

analysis. The Bartlett‟s test of sphericity was highly significant (p<0.01), rejecting the null hypothesis

that the eight variables are uncorrelated in the population.

Result of Factor analysis.

Using Principal components with varimax rotation only attributes with factor loadings of 0.5 or

greater on a factor were regarded as significant. There were eight variables in this section and out of

8, 4 variables are considered as significant with factor loading of .5 or greater. The factor analysis

generated one factor explaining 64.613 percent of the variability in the original data

1) GST implementation: This factor mentioned that GST will improve government revenue. it is

measured by item 8, 3, 6 and 4.These items are “GST will improve central/state government revenue”,

“I feel that central and state government should govern GST jointly”,”Due to implementation of GST

differentiation between service tax and goods tax will be difficult GST should come with lower rate”

Table displays that variable 8 is the strongest and explains 64.618 percent variance and has total factor

load of .813.

TABLE 3: COMPONENT MATRIX FOR PERCEPTION OF VAT PAYERS TOWARDS GST

Var No. F1 Communalities

8 .813 .661

3 .807 .652

6 .800 .641

4 .795 .637

EV 2.585

`1CV 64.618

*Note: one Factor is derived factor

Table 4: FACTOR ANALYSIS (LOADINGS WITH VARIABLES)

Factors Item Item Item Item

FACTOR 1

GST

implementation

I feel that central

and state

government

should govern

GST jointly.

(3.61)

GST will

improve

central/state

government

revenue.

(3.56)

Due to

implementation of

GST differentiation

between service tax

and goods tax will be

difficult. (3.66)

GST should

come with

lower rate.

(3.51)

*The values in parenthesis represent the average score for the variables under each Factor that

determine the perception of VAT payers towards GST

RESULTS OF ONE WAY ANOVA

To test the significance of variance and understand inter-level difference between and within group

treatments, the data were treated with F test analysis



TABLE 5: ANOVA

Sum of

Squares

df Mean Square F Sig.

Between Groups 3.992 3 1.331 3.588 .015

Within Groups 83.440 225 .371

Total 87.432 228

Table 5 shows that F 3.588 and sig 0.015 which is less than .05 (95 percent confidence level) the

null hypothesis is accepted and it is concluded that there is significant difference in the opinion

of vat tax payers towards GST with respect to their experience.

TABLE 6:DESCRIPTIVES

N Mean Std.

Deviat

ion

Std.

Error

95% Confidence

Interval for Mean

Minimu

m

Maximum

Lower

Bound

Upper

Bound

less than 5 50 3.7625 .5956

1 .08423 3.5932 3.9318 2.13 4.75

5 to 10 84 3.5268 .5115

6 .05582 3.4158 3.6378 1.88 4.63

10 to 15 56 3.6138 .7440

2 .09942 3.4146 3.8131 1.38 4.75

more than

15 39 3.8782

.6045

9 .09681 3.6822 4.0742 2.13 4.63

Total 229 3.6594 .6192

5 .04092 3.5788 3.7400 1.38 4.75

To test the significance of difference between means of education, Tukey test was applied

TABLE 7:MULTIPLE COMPARISONS

Dependent Variable: GST

(I) experience (J) experience Mean

Differenc

e (I-J)

Std.

Error

Sig. 95% Confidence Interval

Lower

Bound

Upper Bound

Tukey HSD

less than 5

5 to 10 .23571 .10877 .136 -.0458 .5173

10 to 15 .14866 .11849 .593 -.1580 .4553

more than 15 -.11571 .13010 .810 -.4524 .2210

5 to 10

less than 5 -.23571 .10877 .136 -.5173 .0458

10 to 15 -.08705 .10506 .841 -.3590 .1849

more than 15 -.35142* .11800 .017 -.6568 -.0460

10 to 15 less than 5 -.14866 .11849 .593 -.4553 .1580

5 to 10 .08705 .10506 .841 -.1849 .3590

more than 15 -.26437 .12701 .162 -.5931 .0644

more than 15 less than 5 .11571 .13010 .810 -.2210 .4524



5 to 10 .35142* .11800 .017 .0460 .6568

10 to 15 .26437 .12701 .162 -.0644 .5931

Bonferroni

less than 5 5 to 10 .23571 .10877 .188 -.0538 .5252

10 to 15 .14866 .11849 1.000 -.1667 .4640

more than 15 -.11571 .13010 1.000 -.4620 .2306

5 to 10 less than 5 -.23571 .10877 .188 -.5252 .0538

10 to 15 -.08705 .10506 1.000 -.3667 .1926

more than 15 -.35142* .11800 .019 -.6655 -.0373

10 to 15 less than 5 -.14866 .11849 1.000 -.4640 .1667

5 to 10 .08705 .10506 1.000 -.1926 .3667

more than 15 -.26437 .12701 .231 -.6024 .0737

more than 15 less than 5 .11571 .13010 1.000 -.2306 .4620

5 to 10 .35142* .11800 .019 .0373 .6655

10 to 15 .26437 .12701 .231 -.0737 .6024

*. The mean difference is significant at the 0.05 level.

From the Tukey Test „Multiple Comparisons‟ shows that the entire groups vary with each other. For

all the category of experience, the value p is lower than the significant level of .05; hence these groups

vary. On the basis of above table we can conclude that taxpayers who are having more experience

have better understanding and approach towards tax system.

FINDINGS

Result of factor analysis

To analyze the perception of VAT payers toward the goods and service tax we have studied the

current tax system and the perception of respondents toward its. Several variables such as GST

impact, its implementation etc have been studied. One factor was explored.

GST implementation: This factor mentioned that GST will improve government revenue and they

believe that after the implementation of GST differentiation between goods tax and service tax will be

difficult

On the Basis of one way ANOVA

There is significant difference in the perception of Value added tax payers with respect to their

experience then there lays a difference, the person who are having good experience of above 15 years

they are supporting Goods and service tax implementation..

CONCLUSION

On the basis of the above study we can conclude that tax payers are ready to accept Goods and

service tax they are taking it in a positive manner. The study discloses that the perception of

taxpayers vary on the basis of experiences as tax payers who have good experience of above 15 years

are supporting Goods and service tax in place of old indirect tax system.



References:

Abhishek A. Rastogi (2012). Goods and Service Tax. Taxmann Publication.

Garg,G.(2014).Basic Concepts and Features of Good and Service Tax In India. International

Journal of Scientific Research and Management (IJSRM), 2, 542.

Kasinath, S. (2016). A Study of Income Tax in India: Taxpayers Point of View. Journal of

Commerce and Management Thought, 7(4), 768-780.

Maxwell J. A. (1996), “Qualitative design research” Sage publications applied Social research

Methods series Vol. 41 ISBN 0-8039-738-2

Mcnabb E. D., (2002), “Research Methods in Public Administration and nonprofit

Management”, ISBN-0765609576

Nunnally, C. (1978). Psychometric Theory. McGraw-Hill: New York, NY.

Parry C. (1998), “Process of a case study methodology for post graduate research in

marketing” European Journal of Marketing Vol. 32 No. 9/10 PP. 785-802

Raghuram & Deepa (2015) Goods and Services Tax: The Introduction Process, Working

Paper No. /03/01 Indian Institute of Management, Ahmedabad

Selltiz, C., Wrightsman, L. and Cook, W. (1976). Research Methods in Social Relations. Holt,

Rinehart and Winston: New York, NY.

Taqvi, M.; Srivastava, A. and Srivastava, R. (2013). Challenges and Opportunities of Goods

and ServiceTax (GST) in India .Journal of applied research, 3(5).

Vasanthagopal, R. (2011). GST in India: A Big Leap in the Indirect Taxation System.

International Journal of Trade, Economics and Finance, 2 (2), 123-139.

Yin Robert K. (1994), “Case study Research Design and Methods” 2nd edition, sage

publications

Oulton T. (1995), “Management Research for information” Management Decision, Vol.33

No.5 PP.63-67



Annexure:

QUESTIONNAIRE (VAT)

Dear Sir / Madam

I am currently pursuing PhD from DAVV University, on “A Managerial Study of Tax Reforms in

India: Strategic Challenges and Issues” We recognize the value of your time, and sincerely

appreciate your efforts on our behalf. Individual responses are anonymous and all company level data

will be held in confidence. Please take few minutes to complete this survey and submit it at your

earliest convenience.

Section 1 Preliminary questions:-

Name:-

Designation:-

Organization:-

Age:-

Less than 30 30 to 40 40 to 50 More than 50

Gender: - Male / Female

Category:-

wholesaler retailer Tax

practitioner

Chartered accountant

Contact details:-

Address:-

Town/city:-

State:-

E-mail Id:-

Qualification

Experience

Less than 5 5 to 10 10 to 15 More than 15

MBA M.COM CA Others



Section 2

Please rank below listed question on 1-5 likert scale, as mentioned below

1. Strongly Disagree 2. Disagree 3. Neutral 4. Agree 5. Strongly Agree

Goods and service tax

a) GST Will reduces inflation (Avoid double point duty)

b) GST will reduce the cash / black market.

c) GST Will ,Improve Central / State Govt. Revenue

d) GST Should come with Lower Rate.

e) GST Seminars required at root level.

f)Due to implementation of GST Differentiation between service

tax and good tax will be difficult

g)I feel Government should implement GST

h)I feel that Central and state government should govern GST

jointly

Place:

Signature

Date:

Mrs . Preeti singh Chouhan

Thank you for completing this questionnaire………….



a study of perception of taxpayers towards gst …icmrr.org/global/pdffiles/ijfrr/f201709005.pdf ·...

Documents