Impact Of Good and Service Tax on Small and Medium Enterprises (SMEs) In India
Keywords:
GST impact, SMEs, compliance costs, competitiveness, formalization, cash flow challengesAbstract
This study investigates the effects of the Goods and Services Tax (GST) on Small and Medium Enterprises (SMEs) in India by utilizing secondary data and a systematic synthesis of existing literature. It assesses the influence of GST on compliance costs, cash flows, formalization, market access, and competitiveness for SMEs from 2017 to 2025. The analysis integrates official tax collection data, government reports, policy documents, as well as peer-reviewed and grey literature studies. The results indicate varied impacts: medium-sized SMEs that became part of formal B2B supply chains experienced advantages from streamlined input tax credits and diminished inter-state barriers, whereas micro and smaller enterprises encountered relatively higher compliance burdens, transitional cash flow challenges, and limitations in digital capacity. The paper concludes with policy suggestions designed to maintain the efficiency benefits of GST while alleviating specific challenges faced by SMEs.
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