“Goods and Services Tax (GST) and Its Impact on Small Businesses in India”

Abstract

The Goods and Services Tax (GST) in India marked a significant reform in the country’s indirect taxation system. Implemented on 1 July 2017, GST replaced multiple indirect taxes with a unified tax structure aimed at simplifying taxation, improving transparency, and promoting economic growth. Small businesses, which form a major part of the Indian economy, have experienced both opportunities and challenges due to this reform. the impact of GST on small businesses in India with special focus on compliance requirements, tax administration, operational efficiency, and financial performance. GST has contributed to greater transparency, reduced cascading effects of taxes, and improved interstate trade by creating a common national market. Digital tax filing and input tax credit mechanisms have encouraged formalization of businesses and better record maintenance. However, many small enterprises have faced difficulties related to technological adaptation, increased compliance costs, frequent policy changes, and lack of awareness regarding GST procedures. Rural and micro-level businesses particularly encountered challenges in maintaining digital records and filing regular returns.