The rollout of GST was a necessary reform for bringing transparency and uniform taxation.

GST accelerated formalisation, though not without challenges. It has unintentionally widened the gap between formal and informal sectors. Many MSMEs, especially micro units, struggle with compliance, invoicing, and filing requirements. Unable to fully utilize input tax credits, they face cost disadvantages.

When a 2-3 person unit can’t afford compliance, higher costs quietly push them out.

The result is a gradual shift of business toward the formal sector and concentration of market share with a few players – leaving small units behind and widening inequality.

Recognizing this divide is the first step. The next lies in making compliance simpler, more affordable, and more inclusive – so that formalisation becomes an enabler of opportunity, not a cost burden.