Evaluating The Influence Of GST-Driven Input Tax Credit Mechanisms On Stock Transfers, Receivables, And Payables

Abstract

This research delves into the ways India's Goods and Services Tax (GST) system, with its emphasis on Input Tax Credit (ITC) mechanisms, has reshaped stock transfers, accounts receivables, and payables for micro and small enterprises in Mumbai. We adopted a quantitative survey approach, collecting data from 162 GST-registered businesses across consumer-facing sectors like electronics retail, pharmaceuticals, wholesale trading, logistics services, hardware supplies, and consumer durables. Stratified cluster sampling was used across Mumbai's commercial hubs, targeting firms with under 50 employees, annual turnovers of ₹5–10 crore, and at least 12 months of GST compliance. The questionnaire, offered in Hindi and English, explored shifts in stock transfer practices over 6–12 months, ITC claim efficiencies, effects on receivables and payables cycles, and business context controls. Results show that strong ITC efficiency shortens receivables by 15 days on average (r = -0.58, p < 0.001) and allows strategic payables extension, bolstering cash flow. Firms scoring high on the ITC index (over 80) experienced fewer stock transfer delays and better working capital ratios. In sum, effective ITC handling drives smoother inventory flows and financial flexibility, and the authors recommend sector-tailored training to help small businesses in fast-paced markets like Mumbai maximize GST advantages and build resilience.