Impact of GST on Tax Compliance and Business Performance of Small and Medium Enterprises in India: A Review and Meta-Analytic Synthesis of Past Work

Abstract

The Goods and Services Tax (GST), introduced in India on 1 July 2017, replaced a fragmented system of central and state indirect taxes with a single destination-based value-added tax. Small and medium enterprises (SMEs), which contribute substantially to output and employment, were expected to benefit from input tax credit, reduced cascading and a more transparent compliance framework, yet they also face new filing obligations, digital requirements and transitional difficulties. This paper is a review research paper focused on past work, synthesizing empirical studies, theoretical contributions and policy documents on GST, tax compliance and SME business performance. Following a structured search and screening protocol, the reviewed literature is organized into compliance-behaviour, compliance-cost and performance strands, and findings are compared using a narrative meta-analytic synthesis that codes the direction, context and methodology of each study. The synthesis indicates that GST has generally improved formal compliance, transparency and supply-chain efficiency, while compliance costs, input tax credit refund delays, technological gaps and frequent rule changes continue to erode performance gains for micro and small firms. Critical gaps include limited panel data, weak causal identification and under-representation of medium enterprises. The findings also reveal that the benefits of the reform are unevenly distributed, with digitally capable and better-capitalized firms gaining most, which has important implications for how support is targeted. The paper closes with a research agenda and policy recommendations for simplification, capacity building and longitudinal evaluation. Taken together, the review offers a consolidated evidence base for scholars and policymakers.