Evaluating the Impact of Income Tax Policies on MSME Units in Punjab

Abstract

The Micro, Small, and Medium Enterprises (MSMEs) sector plays a crucial role in Punjab’s economic landscape by contributing significantly to employment generation, industrial output, and regional development. However, tax compliance and the broader implications of tax policies on MSMEs remain complex and under-explored areas. This study aims to evaluate the impact of various tax policies—both at the state and national levels—on the operational efficiency, financial performance, and growth prospects of MSMEs in Punjab. Using a mixed-method approach that combines quantitative data from surveys and financial records with qualitative interviews of business owners and tax consultants, the study seeks to identify the key factors influencing tax compliance behaviour and administrative burdens faced by these enterprises. Particular attention is paid to GST implementation, digital filing mandates, and the availability of tax incentives, and how these have reshaped the tax landscape for MSMEs.