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Stream/Area:
-
Subject:
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Paper ID:
10.55041/IJSREM.GSTCOS108
Volume:
10 |
7 |
Jul 2026
Pages:
1-8
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.
Department Of MBA
CMR Institute of Technology, Hyderabad, Telangana, India.
Department Of MBA
CMR Institute of Technology, Hyderabad, Telangana, India.
This research paper examines how the Goods and Services Tax (GST) has intensified regional inequalities within Telangana’s rural economy by affecting tax compliance, digital readiness, and the formalization capacity of rural micro, small, and medium enterprises (MSMEs). Telangana’s economy is dominated by services, which contribute 65.7% of Gross State Value Added (GSVA), while agriculture and allied activities still employ a substantial share of the population and remain critical for rural livelihoods. The study focuses on the exclusion of informal enterprises and the role of the digital divide in shaping GST compliance outcomes across urban and rural MSMEs in Telangana. A structured primary survey of 120 MSME owners from selected urban and rural districts of Telangana is proposed and analyzed using descriptive statistics, chi-square testing, independent sample t-tests, correlation, and multiple regression. The analysis shows that rural enterprises experience lower digital readiness, higher dependence on tax intermediaries, greater compliance costs relative to turnover, and lower awareness of input tax credit mechanisms than urban enterprises. These disadvantages align with broader state-level development asymmetries across districts and with documented digital infrastructure gaps that continue to affect rural economic participation. The study argues that GST has created efficiency gains for more formal and digitally capable enterprises, but it has simultaneously imposed a disproportionate compliance burden on rural MSMEs operating with limited connectivity, lower digital literacy, and high informality. The findings support policy recommendations centered on district-level GST facilitation centers, targeted digital capability programs, simplified compliance for micro-units, and stronger institutional support for rural enterprise formalization.
KEYWORDS
The study concludes that GST has improved tax standardization and formal business integration, but its benefits are distributed unevenly across Telangana. Rural MSMEs face lower digital readiness, weaker awareness, and higher mediated compliance burden, making them less able to navigate the tax system effectively. In this sense, GST functions not only as a fiscal reform but also as a test of digital and institutional inclusion. Unless rural enterprises receive stronger infrastructural, informational, and procedural support, GST may continue to reinforce the urban-rural divide in Telangana’s business environment. A more inclusive compliance ecosystem is therefore necessary if tax reform is to contribute to balanced regional development rather than deepen existing disparities.
Department of Economics and Statistics, Government of Telangana. (2024). Telangana Socio Economic Outlook 2024. Directorate of Economics and Statistics, Government of Telangana. https://www.des.telangana.gov.in/publications/Socio%20Economic%20Outlook-2024.pdf Invest India. (2023). Telangana Socio Economic Outlook 2023. https://static.investindia.gov.in/s3fs-public/2023-03/Telangana-Socio-Economic-Outlook-2023.pdf Ministry of MSME, Government of India. (2023). Strategic Investment Plan (SIP) under RAMP: Telangana. Rural MSMEs and Agro & Rural Industries Division. https://ramp.msme.gov.in/ramp/pdf-documents/sip-states/telangana.pdf Reddy, P. R., & Bantilan, C. (2011). Regional disparities in Andhra Pradesh, India. International Crops Research Institute for the Semi-Arid Tropics (ICRISAT). https://oar.icrisat.org/6224/7/reddy_Bantilan-26_11_11.pdf Singh, A., & Kumar, R. (2025). GST Impact on MSMEs in India. Scribd Document. https://www.scribd.com/document/808682638/Impact-of-GST-on-Micro-Small-and-Medium-Enterprises-MSM Sinha, S., & Gupta, P. (2025). The Role and Challenges of MSMEs in Telangana’s Economic Development. JETIR, 12(6), 123–145. https://www.jetir.org/papers/JETIRHF06043.pdf Singh, A., & Sharma, L. (2018). Digital divide, digital literacy and digital adoption among MSMEs. University of Hyderabad. https://igmlnet.uohyd.ac.in/docs/hi-res/hcu_images/TH13625.pdf Singh, R., & Verma, K. (2025). Managing GST Challenges in the Indian MSME Sector. IJRPR, 5(9), 876–892. https://ijrpr.com/uploads/V5ISSUE9/IJRPR33077.pdf The India Forum. (2025, December 15). Socio-Economic Underbelly of ‘Telangana Rising’. The India Forum. https://www.theindiaforum.in/economy/socio-economic-underbelly-telangana-rising Times of India. (2024, August 19). District disparities in Telangana revealed: Huge gap in economic figures. Times of India, Hyderabad. https://timesofindia.indiatimes.com/city/hyderabad/district-disparities-in-telangana-revealed-huge-gap-in-economic-figures
Publication Date
7/5/2026
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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