Towards Simplified Compliance and Dispute Resolution: A Critical Review of Tax Reforms for Small Businesses in India

Abstract

Small businesses are the backbone of India’s economy, but have historically faced high compliance burdens and complex dispute resolution processes under the tax system. Recent tax reforms, especially those introduced in the Union Budget 2025 and the new Income Tax Bill 2025, aim to streamline compliance, reduce administrative costs, and make dispute resolution more efficient for small businesses and MSMEs. This paper makes a perspective analysis of tax reforms for small businesses in India, particularly that of Goods and Services Tax (GST), through critical examination of the impact of these reforms, analysis of their effectiveness, limitations, and implications. The study uses a mixed-methods research methodology, combining qualitative and quantitative research methods. The qualitative research method involves document analysis and policy assessment using information from secondary sources. The quantitative research involves analysing quantitative data collected from secondary sources such as various reports, documents and databases. The findings emphasize the need for streamlined compliance and dispute resolution mechanisms, user-friendly digital infrastructure, continued focus on taxpayer awareness & training, that will be crucial to build upon the gains of existing tax reforms, ensuring sustainable growth for India’s small business segment.