Volume : 12, Issue : 5, MAY 2026

GST CHALLENGES FOR SMALL BUSINESSES: A STUDY

MONIKA JATTI

Abstract

The implementation of Goods and Services Tax (GST) in India on 1st July, 2017 marked its one of the most impactful tax changes in the history of indirect taxes in India. GST was supposed to be the pivotal tax reforms subsuming all the cascading tax effects, a single tax framework to make compliance easier and create a common national tax market from the hodgepodge of state and central taxes. The desired goals have been successfully obtained at macro level as the collection of gross GST has hit an all-time high of ?22.08 lakh crore in 2024–25, but the ground level- experience has been rather difficult for small and micro enterprises. This research is a thorough study of the problems with GST for small businesses in India. The results show that, on average, the compliance cost for small businesses is equivalent to 2.2 per cent of their annual sales and amounts to about ?88,000 per annum, which is regressive and burden on the smallest of the small businesses. More than 80 per cent of surveyed SMEs say GST is complicated, and 68 per cent of SMEs are facing the problem of delayed ITC refunds, which are leading to significant liquidity issues. The paper ends with specific policy prescriptions such as (i) rationalisation of rates (ii) making return filing simpler (iii) extending the scope of the Composition Scheme (iv) providing some specific supports to the felicitous information technology for micro enterprises. The study comes at a time when India's GST framework has been moving towards being inclusive and MSME friendly.

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IESRJ

International Educational Scientific Research Journal

E-ISSN: 2455-295X

International Indexed Journal | Multi-Disciplinary Refereed Research Journal

ISSN: 2455-295X

Peer-Reviewed Journal - Equivalent to UGC Approved Journal

Peer-Reviewed Journal

Article No : 18

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