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Stream/Area:
-
Subject:
-
Paper ID:
IJSREM63927
Volume:
10 |
5 |
May 2026
Pages:
1-9
Publication Frequency:
Monthly (12 issues per year)
License:International Journal of Scientific Research in Engineering and Management follows the Creative Commons Attribution 4.0 (CC BY 4.0) License, allowing free use and distribution with proper attribution.
Management
Veeranari Chakali Ilamma Women’s University
The Goods and Services Tax (GST) regime in India came into effect in July 2017 and has been a game-changer for the country's indirect tax regime, and thus, for the nature of labour markets and business activities. This research paper aims to understand the relationship between the GST implementation with the formalisation of labour in India from the Management, Public Policy and Human Resource Management (HRM) angle. The study is secondary in nature and uses only secondary data sources like reports prepared by the GST Council, Ministry of Labour and Employment, Employees’ Provident Fund Organisation (EPFO), Employees’ State Insurance Corporation (ESIC), Reserve Bank of India (RBI), International Labour Organization (ILO), World Bank, National Sample Survey Office (NSSO), Centre for Monitoring Indian Economy (CMIE), peer-reviewed journals. The study is conducted using descriptive and analytical research methodologies, which are applied to analyse the trends in MSME registration, payroll formalisation, digital systems for compliance, documentation of employee workforce and organisational employment growth post-GST.The study shows that GST has led to the growth in business registration, introduction of digitised payroll systems, extension of social security provision and enhanced documentation of the workforce. Yet problems like compliance cost, technical difficulties, informal contractual job and financial burden on MSMEs are still affecting the process of full labor formalisation. Thus, the study comes to an end, and identifies some opportunities and structural problems created by GST in India's labour market. The paper suggests that policies need to be revamped in these areas - MSME support, digital literacy, labour awareness and integrating compliance frameworks to boost inclusive economic growth and formal employment.
KEYWORDS
GST is a revolutionary change in the economic and governance system of India. GST has an impact beyond taxation, which extends to the operation of enterprises, documentation of workers, digitisation, and formalisation. The results of this study suggest that the implementation of GST has positively influenced the registration of enterprises, the formalisation of payrolls, incorporation of social security and organization of employment.Businesses were engaged in digital compliance systems, which facilitated the documentation of the workforce and enhanced transparency in labour management. Rise in the number of registrations with EPFO and ESIC indicate steps towards formalisation of labour force and extension of social security. The study also brings out a number of issues in implementing GST. The MSMEs were struggling with challenges in their operations and finances because of adherence issues, technological challenges, and lack of awareness. Labour formalisation has remained ineffective due to informal contractual employment and unevenness across regions. GST has opened up opportunities for governance of the workforce, structured employment system and digital HR practices, from a Human Resource Management and Public Policy perspective. However, there is a need for more than tax measures to support the formalisation of labour. A combination of initiatives such as digital literacy, MSME support, labour law enforcement and social security system extension is critical to sustaining formal employment growth. Empirical studies on the trends of formalisation in the sectors, experiences of employees, and the long-term effects of labour productivity and employment quality due to the implementation of GST could be a future research scope.
1. Bhatia, R., & Singh, P. (2020). GST and enterprise formalisation in India. Indian Journal of Economics and Business, 19(3), 215–228. 2. Chen, M. A. (2019). The informal economy revisited: Examining the past, envisioning the future. Indian Journal of Labour Economics, 62(4), 563–576. 3. Deloitte India. (2020). Impact of GST on MSMEs in India. Deloitte Insights. 4. Economic Survey of India. (2018). Economic Survey 2017–18. Government of India. 5. Employees’ Provident Fund Organisation. (2023). Annual payroll data report. Ministry of Labour and Employment. 6. Employees’ State Insurance Corporation. (2023). Annual report 2022–23. Government of India. 7. International Labour Organization. (2018). Women and men in the informal economy: A statistical picture. ILO Publications. 8. Kumar, S., & Joseph, A. (2021). Digital payroll systems and labour formalisation in India. International Journal of Human Resource Studies, 11(2), 88–104. 9. Ministry of MSME. (2022). Annual report 2021–22. Government of India. 10. Purohit, M. (2019). GST reform and economic integration in India. Asia-Pacific Tax Bulletin, 25(2), 1–12.
Publication Date
5/24/2026
Peer Review Type
Double-Blind Peer Review
Review Rounds: 2
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The authors declare no conflict of interest related to this research work.
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