Leveraging Generative AI for Enhancing GST Compliance Efficiency: A Secondary Study of MSMEs in Gujarat

Abstract

The introduction of the Goods and Services Tax (GST) in India aimed to simplify the indirect tax system and improve transparency across businesses. However, Micro, Small, and Medium Enterprises (MSMEs), particularly in Gujarat, continue to face significant challenges in GST compliance, including complex return filing procedures, invoice mismatches, and frequent regulatory updates. These issues increase operational costs and create inefficiencies in financial management.

This study is based on secondary research and examines how generative artificial intelligence (AI) can improve GST compliance efficiency among MSMEs. The research analyses existing literature, industry reports, and government publications to understand current compliance challenges and the role of AI-driven technologies in addressing them. Generative AI, as an advanced form of artificial intelligence, enables automation of tasks such as invoice processing, tax classification, anomaly detection, and compliance reporting.

The findings suggest that AI-powered systems can significantly reduce manual errors, enhance accuracy in tax filings, and enable real-time monitoring of compliance activities. Additionally, these technologies support predictive risk analysis, allowing businesses to identify potential compliance issues in advance. Despite these benefits, the adoption of AI among MSMEs remains limited due to factors such as lack of awareness, high implementation costs, and limited digital infrastructure.

The study concludes that generative AI has strong potential to transform GST compliance processes for MSMEs by improving efficiency, reducing costs, and enabling proactive compliance management. It also highlights the need for supportive policies, awareness programmes, and affordable AI solutions to encourage wider adoption among small businesses.