Investigating the effect of goods and service tax on operational performance, cost efficiency and profit margins of MSMEs Online publication date: Mon, 18-Dec-2023
by Neba Bhalla; Rakesh Kumar Sharma; Inderjit Kaur
International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE), Vol. 20, No. 1/2, 2024
Abstract: Tax and economy go hand in hand, and whenever any overhaul in tax structure takes place, it becomes vital to examine the effect on micro units of economy and its businesses. The present study evaluates the impact of goods and service tax (GST) on the performance of Indian micro, small, and medium enterprises (MSMEs) after the tax system changes in India. The empirical findings from ordinal regression results state that tax system restructuring has reduced the overall cost of the firms and improved operative performance. Moreover, the technological shift by the GST Network led to paperless compliances, which saved the productive time of MSMEs. Further, the results stated that the micro-units have shown a pronounced significant and positive impact amongst all the enterprises. The results may aid other countries in understanding the after-effect of tax reform on MSMEs' performance.
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