Published Online:October 2024
Product Name:The IUP Journal of Law Review
Product Type:Article
Product Code:IJLR021024
Author Name:Ashbin Krishna K K
Availability:YES
Subject/Domain:Law
Download Format:PDF
Pages:14 - 24
This paper focuses on the impact of Goods and Services Tax (GST) on micro, small and medium enterprises (MSMEs), which play a pivotal role in employment generation and economic growth. GST eliminated the cascading effects of several taxes and its introduction has had a substantial influence on MSMEs. Before GST, MSMEs faced a complex system of federal and state taxes, which raised expenses, besides complicating the compliance requirements. GST combined multiple taxes into a single system of taxation, thus significantly reducing the cost of goods while effectively allowing for input tax credits. It also streamlined the entire tax structure. However, the transition also brought certain challenges for MSMEs, particularly concerning compliance requirements and adapting to digital tax filing processes. To address these challenges, the government introduced the Composition Scheme option, under which small businesses can opt for fixed tax rates, instead of regular GST rates.
The introduction of GST in 2017 was an important tax reform in India. It aims at creating a consolidated tax structure. It supersedes many indirect taxes that were previously levied by both the Union and state governments.