Taxpayers' perceptions and behavioral responses to GST 2.0 slab rationalization: evidence from MSMEs in the Indian...

Tax reforms in emerging economies are increasingly being conceptualized as a tool of behavioral governance as opposed to being a tool of fiscal restructuring. This empirical research undertakes the behavioral implications of the GST 2.0 slab rationalization on voluntary tax compliance among Micro, Small and Medium Enterprises (MSMEs) that are engaged in the automotive market of India. Drawing on an integrated theoretical construct incorporating the Theory of Planned Behavior (TPB Theory), Tax Morale Theory (TM Theory), and the Slippery Slope Framework (SSF), the current research incorporates a mechanism-based model that outlines the extent to which cognitive appraisals, intrinsic moral motivation, and institutional trust all have an impact on compliance behavior.

The survey data collected among the key stakeholders of MSMEs located in the main automotive industrial belts of Tamil Nadu, and analyzed through Partial Least Squares Structural Equation Modeling (PLS-SEM) were used as empirical evidence.

Findings suggest that positive attitudes and perceived social norms are not sufficient to reflect into voluntary compliance but instead, perceived behavioral control is the most salient antecedent, and Tax Morale is a pivotal mediating construct. Furthermore, Trust in tax authorities strengthens the relationship between subjective norms and tax morale, highlighting the importance of institutional credibility in shaping voluntary compliance behavior. Overall, the findings suggest that perceived capability, intrinsic moral motivation, and institutional trust jointly influence compliance behavior under GST 2.0.

The study contributes to behavioral taxation literature by integrating cognitive, moral, and institutional perspectives within a unified framework and offers practical implications for designing trust-based tax reforms in emerging economies.