ABSTRACT

 

The GST regime brought about several changes, including the subsuming of multiple taxes, simplification of tax compliance procedures, and the establishment of a unified national market. While these reforms were envisioned to benefit MSMEs by reducing tax cascading, enhancing competitiveness, and facilitating easier interstate trade, the actual impact has been nuanced and multifaceted.

This study employs a mixed-methods approach, combining qualitative and quantitative analyses to comprehensively understand the GST’s impact on MSMEs. While GST has simplified tax procedures to some extent, MSMEs have confronted problems in adapting to the GST. Compliance requirement, for MSMEs, have increased administrative burdens and costs. In addition, the complexities in understanding and navigating the GST framework have posed hurdles, especially for micro-enterprises with limited resources and technical expertise.

Furthermore, this study investigates the differential effects of GST across various sectors within the MSME segment, considering factors such as sectoral composition, geographical location, and business size. It also assesses the role of government policies and support mechanisms in mitigating the challenges and leveraging the opportunities arising from GST implementation for MSMEs.

While GST represents a significant step towards a unified tax regime in India, its implications for MSMEs are nuanced and require careful policy interventions. Addressing compliance challenges, streamlining refund processes, enhancing digital infrastructure, and providing targeted support mechanisms are essential to harness the full potential of MSMEs and foster inclusive economic growth in India.

Keywords: Tax System, GST, MSMEs, Impact