Goods And Services Tax And MSME Performance: A Systematic Review And Meta-Analysis Of Compliance, Financial, And Operational Outcomes

Abstract

The Goods and Services Tax, introduced in July 2017, remains the single largest indirect tax reform in India's 
post-independence economic history, and its consequences for Micro, Small and Medium Enterprises have 
generated a fragmented but rapidly growing body of research. This paper conducts a systematic review and meta
analysis of studies published between 2017 and 2025 that examine GST's effect on MSME compliance behavior, 
financial performance, and operational outcomes. Fifty-eight peer-reviewed articles, working papers, and 
government reports were screened following PRISMA-informed selection criteria, of which forty-one were 
retained for detailed synthesis. Three consistent patterns emerge. First, compliance costs rose sharply for micro 
enterprises immediately after implementation but declined as digital literacy and GST Suvidha Provider networks 
matured. Second, financial outcomes-profitability, liquidity, and working capital efficiency-show a U-shaped 
trajectory: an initial dip during 2017-2019 followed by measurable improvement from 2020 onward, partly 
attributable to Input Tax Credit gains offsetting cascading tax effects[1][2]. Third, operational outcomes, 
including formalization and access to interstate markets, appear to be the most consistently positive dimension 
across studies, though results vary by state, sector, and enterprise size. The meta-analysis also identifies 
methodological weaknesses in the existing literature, notably an overreliance on small, non-random samples and 
limited longitudinal tracking. The paper closes by proposing a research agenda centered on panel-data designs 
and disaggregated size-class analysis.