A Study on the Difficulties Encountered by Small Enterprises in India under the GST Regime

Abstract

The present study examines the compliance burdens and adoption challenges of the Goods and Services Tax (GST) among small businesses in India from legal and socio-economic perspectives. The research identifies that although GST was introduced as a comprehensive indirect tax reform aimed at simplifying the taxation system and enhancing transparency, its implementation has imposed significant compliance challenges on small-scale enterprises. The study highlights that frequent return filing, technical glitches in the GST portal, and complex documentation requirements constitute major compliance burdens. Furthermore, issues related to ERP/software adoption, administrative complexities, financial constraints, and lack of awareness significantly hinder the effective implementation of GST among small businesses. The findings indicate that proprietorship firms are the most affected due to limited resources and lack of technical expertise. The study also reveals a gap between policy design and ground-level execution, particularly in terms of digital infrastructure and taxpayer support systems. From a socio-economic standpoint, these challenges impact the operational efficiency and financial stability of small enterprises, thereby affecting their contribution to economic growth. The study concludes that there is an urgent need for simplification of GST procedures, strengthening of technological infrastructure, and capacity-building initiatives to ensure inclusive and effective tax compliance. Research underscores the importance of aligning legal frameworks with practical realities to achieve the objectives of the GST regime.