Analysis of GST Compliance and Accounting Procedures in MSMEs

The introduction of the Goods and Services Tax (GST) in India on 1st July 2017 was a major change in the country’s indirect taxation system. It replaced multiple taxes with a single structure. This reform aimed to improve transparency, remove cascading taxation, and boost overall tax compliance. Micro, Small, and Medium Enterprises (MSMEs), which play a key role in job creation and economic growth, have been significantly impacted by this change due to their limited financial and technological resources. The main goal of this study is to look at GST compliance practices and accounting procedures used by MSMEs in India. It also aims to examine the challenges MSMEs face with GST implementation, assess the impact of GST on their accounting systems, and evaluate how much these businesses have adopted digital technology. The research uses secondary data from government reports, academic journals, and previous studies. A descriptive and analytical approach helps interpret GST compliance trends and operational changes in MSMEs. The findings show that GST has improved transparency, standardized accounting practices, and promoted digitalization. However, MSMEs still face major challenges such as complicated return filing, high compliance costs, lack of technical knowledge, and problems with Input Tax Credit (ITC) reconciliation. The study also shows that larger MSMEs adjust more easily to digital systems than smaller ones. In conclusion, while GST has positively changed the taxation framework, there is a need to simplify compliance procedures, enhance awareness programs, and provide stronger technological support to help MSMEs implement these changes effectively.