BARRIERS TO GST COMPLIANCE IN INFORMAL MICRO SERVICE BUSINESSES: AN ECONOMIC STUDY OF CHENNAI METROPOLITAN, TAMIL NADU, INDIA

This study set out to categorise informal micro service businesses in Chennai Metropolitan and examine the barriers keeping them outside the GST net, drawing on primary data from 179 haircutting, ironing and laundry service owners and 145 of their customers. The evidence shows that formalisation is held back not by a single dominant obstacle but by an interlocking set of factors low and unevenly distributed awareness, an almost total absence of professional tax guidance, weak systematic billing practices even as digital payments have taken hold, procedural and cost-related apprehensions, and an owner-side perception that registration is more likely to hurt than help the business. While the recent GST 2.0 reforms have brought welcome structural simplification at the national level, their benefits have yet to meaningfully reach this hyper-local, cash-based segment of the informal economy, underscoring a gap between policy intent and ground-level implementation. At the same time, the relatively favourable customer disposition toward formal billing suggests an underexploited opportunity: if compliance can be simplified, awareness delivered in accessible language through trusted peer channels, and billing formalisation linked to the digital payment habits owners have already adopted, these micro enterprises could be brought into the formal fold with comparatively modest policy effort advancing the broader promise of "One Nation, One Tax" and bringing India's vast informal service economy a step closer to the Viksit Bharat@2047 agenda.

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