A STUDY ON THE IMPACT OF GST ON SMALL AND MEDIUM ENTERPRISES

The implementation of the Goods and Services Tax (GST) marked a significant reform in the indirect taxation system, aiming to unify fragmented tax structures and enhance economic efficiency. Despite its macroeconomic advantages, the transition posed considerable challenges for Small and Medium Enterprises (SMEs), which form the backbone of developing economies. This study investigates the impact of GST on SMEs, focusing on compliance burden, operational efficiency, cost structure, and overall financial performance.

The research problem arises from the disparity between the intended benefits of GST and the actual challenges faced by SMEs in adapting to the new tax regime. The primary objectives are to examine the relationship between GST implementation and SME performance and to analyze its impact on compliance and profitability. The study adopts a quantitative research design using secondary data collected from government reports, financial databases, and industry publications over the period 2017–2024. Statistical tools such as correlation and regression analysis are employed to derive insights.

The findings suggest that while GST has improved transparency and reduced cascading taxes, it has also increased compliance costs and technological dependence, particularly affecting smaller enterprises. The study contributes to policy discourse by identifying structural gaps and recommending measures to enhance GST efficiency for SMEs.