International Journal of Scientific Research and Engineering Development

The Goods and Services Tax (GST) represents one of the most transformative fiscal reforms undertaken by governments across the globe, replacing a fragmented multi-layered indirect tax structure with a unified, destination-based consumption tax. While GST was designed to simplify taxation, eliminate cascading effects, and broaden the tax base, its implementation has generated significant debate regarding its differential impact on small and medium enterprises (SMEs) compared to larger corporations.This analytical paper examines the multifaceted impact of GST on small businesses across four key dimensions: compliance burden and administrative costs, cash flow and liquidity dynamics, competitive positioning, and sectoral variations. Drawing on empirical evidence from economies with established GST regimes — including India, Australia, Canada, New Zealand, and Singapore — the paper identifies critical challenges faced by small businesses and evaluates the effectiveness of government relief measures such as composition schemes, simplified returns, and threshold exemptions.
The analysis reveals that while GST has created long-term structural benefits through input tax credit (ITC) mechanisms and improved market integration, small businesses disproportionately bear the short-to-medium-term compliance costs due to limited resources, inadequate digital infrastructure, and dependence on intermediaries. The paper concludes with evidence-based policy recommendations aimed at balancing revenue objectives with the economic vitality of the small business sector.

Dr.Sk. Abdul Kalam, "Goods and Services Tax (GST) and Its Impact on Small Businesses " International Journal of Scientific Research and Engineering Development, V8(6): Page(3172-3182) Nov-Dec 2025. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.