Manuscript Number : GISRRJ192430

Taxation Laws and Their Impact on Accounting Practices in SMEs

Authors(1) :-Dr. Sanjeev Pal Singh

SMEs act as the backbone to many operating economies around the world. Taxation regulations have a significant impact where it concerns the business and especially on the accounts. This paper aims at finding the correlation between taxation legislation and accounting processes within the SMEs focusing on compliance, challenges, and possible optimization. The research discusses cases that Small & Medium Enterprises (SMEs) face while implementing new government taxation reforms and discussing the effects of the same on the SMEs balance sheets. Log-linear; multiple regression models were responsible for testing the relationship between the POS transactions tax, mobile money taxes and financial performance. For analysis of the research information, SPSS & EXCEL were used and to reveal the descriptive characteristics of the independent and dependent variables and test results. The study shows that intermediate money tax transfer causes a variation in the financial position of the SMEs. Further, it shows the impact of mobile money tax transfer and bank transfer tax on finances of SME business. Negative relationship was noted with all the SMEs in the supply chain since all appreciate that with mobile electronical tax transfers the transaction costs increase while the volume of transaction decreases. There is need to encourage consultations between the government and its allied agencies and the revenue authority before drafting new taxation policies with the intention of including the SMEs. Government should consider tax cuts and better tax incentives in the SMEs’ perspective to optimize their performance. Consumers and SMEs both have reasons to agree with the fact that IMTT has raised their transaction cost and reduced their purchasing capacity; therefore, the government must tweak the legislation administratively and consider the specifics of the case to free the customer in the end and lower business costs. This research recognizes the effects of intermediate taxation to the economy and small businesses.

Authors and Affiliations

Dr. Sanjeev Pal Singh
Associate Professor, Faculty of Commerce, R.B.S. College, Agra

SMEs, purchasing power, taxation policies, revenue authority, GDP, tax transfer, Employment, Innovation.

  1. Awasthi, R. & Engelschalk, M. (2018). Tax Compliance for Small Businesses: A Review of Evidence and Policy Options. World Bank Policy Research Working Paper.
  2. Basu, S. (2016). Taxation Policies and Their Impact on Indian SMEs. Asian Economic Review, 58(3), 315-330.
  3. Brown, K. (2016). Tax Compliance Costs and Their Implications for SMEs. Journal of Accounting and Taxation, 8(6), 90-102.
  4. Chandran, V. (2017). The Challenges of Tax Compliance for SMEs in Emerging Markets. Global Business Review, 18(5), 1123-1140.
  5. Evans, C., Hansford, A., & Hasseldine, J. (2017). The Impact of Tax Complexity on SMEs: Evidence from the UK. Australian Tax Forum, 32(2), 45-60.
  6. Gupta, A., & Mehta, P. (2020). Impact of GST on Accounting Practices in SMEs. Journal of Business Studies.
  7. Gupta, R. (2016). Impact of GST on Indian SMEs. International Journal of Research in Commerce and Management, 7(8), 56-62.
  8. Here are 15 references on "Taxation Laws and Their Impact on Accounting Practices in SMEs" from 2015 to 2018:
  9. Jones, R. & Martin, D. (2015). The Role of Tax Simplification in SME Growth. Journal of Small Business Management, 53(2), 65-80.
  10. Kumar, A. (2018). GST and Its Influence on Financial Reporting in Indian SMEs. Journal of Financial Management, 10(3), 48-55.
  11. Mishra, R. (2016). Accounting Challenges Faced by SMEs Due to Changing Tax Laws. Journal of Indian Business Studies, 3(2), 33-40.
  12. OECD (2015). Taxation of SMEs in OECD and G20 Countries. OECD Publishing.
  13. Patel, N. (2017). GST and Its Role in Modernizing Indian SME Tax Compliance. Journal of Emerging Economies, 9(4), 123-135.
  14. Roy, T. (2018). Simplified Tax Regimes and Their Effectiveness for Indian SMEs. Indian Economic Journal, 66(1), 78-92.
  15. Sharma, P. (2018). GST Compliance and Its Challenges for Small Businesses in India. Indian Journal of Accounting, 49(1), 22-30.
  16. Sharma, R. (2022). Taxation Laws and Their Implications for Small Businesses. Economic Journal.
  17. Singh, M. (2015). The Role of Taxation in Promoting SME Development in India. Economic and Political Weekly, 50(32), 75-81.
  18. Smith, J. (2017). Corporate Tax Reform and SMEs: A Policy Analysis. Journal of Taxation and Economic Policy, 12(4), 45-58.

Publication Details

Published in : Volume 2 | Issue 2 | March-April 2019
Date of Publication : 2019-04-30
License:  This work is licensed under a Creative Commons Attribution 4.0 International License.
Page(s) : 150-156
Manuscript Number : GISRRJ192430
Publisher : Technoscience Academy

ISSN : 2582-0095

Cite This Article :

Dr. Sanjeev Pal Singh , "Taxation Laws and Their Impact on Accounting Practices in SMEs", Gyanshauryam, International Scientific Refereed Research Journal (GISRRJ), ISSN : 2582-0095, Volume 2, Issue 2, pp.150-156, March-April.2019
URL : https://gisrrj.com/GISRRJ192430

Article Preview