GST Implementation and Its Impact on Tax Compliance Behaviour of Small Traders in Punjab: A Survey-Based Study

Abstract

The Goods and Services Tax, introduced in India in July 2017, represents the most sweeping indirect tax reform since Independence — consolidating over a dozen central and state levies into a unified, technology-driven framework. Seven years after its rollout, the compliance experience of small traders — the kirana store owner, the grain merchant, the cloth dealer, the hardware retailer — remains inadequately documented in the academic literature, particularly at the regional and district level. This study examines GST compliance behaviour among small traders in three major commercial centres of Punjab: Ludhiana, Amritsar, and Jalandhar. Primary data were collected from 220 registered GST traders across these cities through a structured questionnaire measuring GST awareness, perceived compliance complexity, compliance cost burden, e-filing experience, and self-reported compliance levels. Chi-square tests of association and multiple regression were used for analysis. Results reveal that while GST registration compliance is high (92.7%), return filing regularity and Input Tax Credit (ITC) utilisation remain significantly lower, particularly among traders with annual turnovers below INR 40 lakhs. GST awareness level is the strongest predictor of compliance regularity (β = 0.38), followed by perceived simplicity of the GSTN portal (β = 0.31). Fear of penalties was significantly associated with registration compliance but not with return filing regularity. The paper offers specific recommendations for improving small trader compliance through GST literacy programmes, simplified return formats, and targeted district-level outreach.

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