சிறு, குறு மற்றும் நடுத்தரத் தொழில் நிறுவனங்களின் (MSMEs) செயல்பாட்டு மூலதன மேலாண்மையில் உள்ளீட்டு வரி வரவு (Input Tax Credit – ITC) கட்டுப்பாடுகளின் தாக்கம்: The Impact of Input Tax Credit (ITC) Restrictions on Working Capital Management of Micro, Small and Medium Enterprises (MSMEs)

முனைவர் இரா. சுப்பிரமணியம்; முனைவர் பெ.சதீஷ்குமார்; முனைவர் வெ. ச.  சீனிவாசன்

doi:10.63300/tm12032026.32

Authors

Dr. R. Subramaniam Head & Assistant Professor, Department of Commerce (PA), Nandha Arts And Science College, Erode - 52. Author
Dr. P. Satheeshkumar Assistant Professor, Department of Commerce (PA), Nandha Arts And Science College, Erode - 52. Author
Dr.V.C.Srinivasan Administrative Officer, Nandha Arts and Science College (Autonomous), Erode. Author

DOI:

https://doi.org/10.63300/tm12032026.32

Keywords:

Input Tax Credit (ITC), GST, MSME, Working Capital, Cash Flow, Blocked Credit, GSTR-2B

Abstract

This research paper analyzes the impact of Goods and Services Tax (GST) Input Tax Credit (ITC) restrictions on the working capital management of Indian Micro, Small, and Medium Enterprises (MSMEs). Despite ITC's design to prevent cascading taxes and improve liquidity, MSMEs face significant challenges securing timely credit due to CGST Act compliance conditions (Sections 16–21), GSTR-2B reconciliation, blocked credits, vendor reliance, and strict deadlines. Drawing on secondary data and 15 recent studies from the past five years, the paper highlights how ITC delays disrupt cash flow, inventory, trade cycles, and the Cash Conversion Cycle, ultimately increasing operational costs, bank debt reliance, and competitive pressure on MSMEs. Finally, it offers policy recommendations to streamline ITC processes and alleviate financial stress for the sector.

Downloads

Download data is not yet available.

Author Biographies

Dr. R. Subramaniam, Head & Assistant Professor, Department of Commerce (PA), Nandha Arts And Science College, Erode - 52.

முனைவர் இரா. சுப்பிரமணியம், தலைவர் மற்றும் உதவிப் பேராசிரியர்,வணிகவியல் துறை (தொழில்முறை கணக்கியல்), நந்தா கலை மற்றும் அறிவியல் கல்லூரி, ஈரோடு - 52.

Dr. R. Subramaniam, Head & Assistant Professor, Department of Commerce (PA), Nandha Arts And Science College, Erode - 52.

Email: drsubramaniam69@gmail.com Orcid Id: https://orcid.org/0009-0004-4576-9419
Dr. P. Satheeshkumar, Assistant Professor, Department of Commerce (PA), Nandha Arts And Science College, Erode - 52.

முனைவர் பெ.சதீஷ்குமார், உதவிப் பேராசிரியர், வணிகவியல் துறை (தொழில்முறை கணக்கியல்), நந்தா கலை மற்றும் அறிவியல் கல்லூரி, ஈரோடு - 52.

Dr. P. Satheeshkumar, Assistant Professor, Department of Commerce (PA), Nandha Arts And Science College, Erode - 52.

Email: drpsatheeshkumar@gmail.com ORCiD: https://orcid.org/0009-0001-2583-8876.
Dr.V.C.Srinivasan, Administrative Officer, Nandha Arts and Science College (Autonomous), Erode.

முனைவர் வெ. ச. சீனிவாசன், நிர்வாக அலுவலர் மற்றும் உதவிப்பேராசிரியர், தமிழ்த்துறை, நந்தா கலை மற்றும் அறிவியல் கல்லூரி (தன்னாட்சி), ஈரோடு.

Dr.V.C.Srinivasan, Administrative Officer, Nandha Arts and Science College (Autonomous), Erode.

Email: srivc2345@gmail.com Orcid Id: https://orcid.org/0009-0008-9926-7982.

References

[1.] International Journal of Creative Research Thoughts. (2025). Impact of GST reforms on MSMEs in the textile sector in Delhi. IJCRT, 13(4). https://www.ijcrt.org/papers/IJCRT25A4390.pdf

[2.] International Journal of Economic Practices and Theories. (2026). Working capital pressures and input tax credit delays under GST: Evidence from small and medium enterprises in Bengaluru's industrial clusters. IJEPT. https://ijapt.org/index.php/journal/article/view/340

[3.] International Journal of Progressive Research in Engineering Management. (2025). Impact of GST on small and medium enterprises (SMEs) in India: Opportunities and challenges. IJPREMS. https://www.ijprems.com/uploadedfiles/paper//issue_7_july_2025/42946/final/fin_ijprems1752862176.pdf

[4.] International Research Journal of Modernization in Engineering Technology and Science. (2026). Impact of GST on small and medium enterprises (SMEs) in India. IRJMETS. https://www.irjmets.com/upload_newfiles/irjmets80100094519/paper_file/irjmets80100094519.pdf

[5.] International Journal of Recent Technology and Innovation. (2025). GST rate rationalisation and its impact on MSME performance in India. IJRTI, 10(11). https://www.ijrti.org/papers/IJRTI2511129.pdf

[6.] International Journal of Recent Technology and Innovation. (2026). GST and accounting standards updates: Impact on small and medium enterprises. IJRTI. https://www.ijrti.org/papers/IJRTI2604269.pdf

[7.] Kalyani, R. (2026, July 1). Input tax credit issues faced by MSMEs under GST: Challenges, recent developments and the way forward. Taxscan. https://www.taxscan.in/top-stories/input-tax-credit-issues-faced-by-msmes-under-gst-challenges-recent-developments-and-the-way-forward-1448382

[8.] Kumaraswamy, S. (2020). Impact of Goods and Services Tax on working capital of small and medium enterprises in India. Entrepreneurship and Sustainability Issues, 7(4), 3464–3476. https://doi.org/10.9770/jesi.2020.7.4(53)

[9.] ResearchGate. (2026). Impact of GST on small and medium enterprises (SMEs) in India: A financial performance study. https://www.researchgate.net/publication/401611159_Impact_of_GST_on_Small_and_Medium_Enterprises_SMEs_in_India

[10.] ResearchGate. (2026). Impact of GST on working capital management of SMEs. https://www.researchgate.net/publication/405056079_Impact_of_GST_on_Working_Capital_Management_of_SMEs

[11.] Shardul Amarchand Mangaldas & Co. (2026). GST 2.0 and India's MSME sector. https://www.amsshardul.com/insight/gst-2-0-and-indias-msme-sector/

[12.] Sureka, A., & Bordoloi, N. (2024). The impact of blocked credit and unavailability of input tax credit on MSMEs in India: An empirical study. Journal of Tax Reform, 10(3), 572–590. https://doi.org/10.15826/jtr.2024.10.3.185

[13.] The Economics Journal. (2025). A study on post-GST compliance perceptions and challenges among MSMEs. https://www.theeconomicsjournal.com/article/view/576/8-2-34

[14.] Zenodo. (2026). GST compliance burden and its impact on business operations of MSMEs: A study in Bengaluru South District. https://zenodo.org/records/19571911

[15.] Zenodo. (2026). A study on the impact of GST regime on India's MSME sector. https://zenodo.org/records/19559573