Differential Perception Of GST Benefits Among Nano Entrepreneurs: A Sectoral Analysis Of Manufacturing, Services And Trading Enterprises In Western Maharashtra

Abstract

India's Goods and Services Tax (GST) was designed to formalize the economy and streamline taxation for small-scale enterprises, empirical evidence suggests a lack of uniformity in how these benefits are realized. Manufacturing, services, and trading enterprises operate under distinct cost structures and market dynamics, leading to potentially heterogeneous responses to the GST regime. This study investigated the differential perception of GST benefits among nano-entrepreneurs in Western Maharashtra, specifically questioning whether sectoral differences influence the perceived utility of tax compliance. By identifying which sectors perceive lower benefits and the specific factors driving these disparities, the research seeks to address critical gaps in current fiscal policy literature regarding the nano-enterprise landscape. The theoretical framework for this study is anchored in Icek Ajzen’s Theory of Planned Behaviour (TPB), utilizing an adapted scale to measure perceived benefits across dimensions such as market access, input tax credit (ITC) eligibility, loan accessibility, and business reputation. Data were collected from 289 nano-entrepreneurs comprising sole proprietors and partners across the industrial hubs of Mumbai, Thane, Pune, Chh. Sambhajinagar and Nasik. The sample represented a balanced mix of B2B, B2C, and hybrid business models. The research instrument’s reliability was rigorously validated, yielding a Cronbach’s Alpha of 0.85, well above the acceptable threshold for internal consistency. The primary hypothesis posited that there would be no significant differences in perceived benefits based on the nature of the enterprise. Statistical analysis utilizing a one-way ANOVA revealed significant differences in perceived benefits across the three sectors (F (3, 285) = 3.367, p = .019). Descriptive statistics indicated that service (M = 28.95) and trading enterprises (M = 28.86) reported the highest perceived benefits, whereas manufacturing enterprises reported significantly lower levels of satisfaction (M = 25.83). Despite a violation of the homogeneity of variance, robust testing via the Brown-Forsythe (p = .027) and Tukey HSD post-hoc comparisons confirmed that manufacturing entrepreneurs perceive significantly fewer advantages than their counterparts in services and trading. Consequently, the null hypothesis was rejected, with further analysis identifying access to government tenders as a primary differentiator in sectoral perceptions. The aforementioned findings were examined alongside plausible explanations from multiple perspectives. These findings carry substantial implications for both policymakers and practitioners. The marked disparity in the manufacturing sector suggests the presence of structural barriers, such as complex input-output chains or information asymmetries regarding government procurement. To bridge this gap, targeted interventions are necessary, including sector-specific compliance training and simplified mechanisms for manufacturing-related ITC claims. For practitioners, the study underscores the importance of strategic positioning to maximize GST advantages. Ultimately, strengthening institutional mechanisms for tender awareness and conducting regular sectoral assessments are vital steps toward ensuring that the benefits of tax formalization are equitably distributed across the nano-entrepreneurial ecosystem.