Statistical Analysis of GST Impact on MSMEs in Chengalpattu, Tamil Nadu: A Study on Compliance, Profitability, and Growth

The introduction of the Goods and Services Tax (GST) in India was intended to create a simplified and transparent tax structure. However, its impact on Micro, Small, and Medium Enterprises (MSMEs) has been widely debated. This study employs statistical techniques, including descriptive statistics, correlation, and regression analysis, to evaluate the effects of GST on MSMEs in Chengalpattu, Tamil Nadu. Primary data was collected from 150 MSMEs across various sectors through structured surveys and interviews. Descriptive analysis revealed that 68% of respondents reported increased compliance costs post-GST implementation, primarily due to mandatory digital filing and higher tax rates on raw materials. A Pearson correlation analysis indicated a negative relationship (-0.52) between compliance costs and profitability, suggesting that higher GST-related expenses significantly impact net earnings. Furthermore, regression analysis showed that a 1% increase in GST compliance costs leads to an average decline of 0.65% in profitability, highlighting the financial strain on small enterprises. Additionally, the study identified a weak correlation (0.21) between GST compliance and business growth, indicating that despite tax standardization, MSMEs in Chengalpattu struggle to expand due to delayed input tax credit (ITC) refunds and working capital constraints. Sector-wise analysis revealed that manufacturing MSMEs faced greater challenges compared to service-based firms due to differential tax rates and raw material costs. The findings emphasize the need for policy reforms to simplify GST procedures, expedite ITC refunds, and offer financial assistance to small businesses. Addressing these concerns is crucial for sustaining the growth and competitiveness of MSMEs in Chengalpattu. Future research can explore industry-specific GST impacts and long-term economic trends to guide policymaking for MSMEs.