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GST – What does it mean to the common business man in India?

GST-yet another tax???

It is my opinion that if all the business in India was done legally (paying the correct taxes), India would be the richest country in the world!!!

For many years, I have had the opportunity of interacting with scores of businessmen across the span of the country of all sizes, starting from the smallest possible business houses to industry leaders doing turnovers of 10,000 crores. And in most cases, a singular thread that connected all of them was their anxiety about the possible impact of taxation on their businesses.

Entrepreneurs who think it is ethical and correct to pay taxes, those that do so grudgingly as they have no other option, those that want to do business but somehow use software to help them evade taxes to those who renounce software altogether for fear of becoming visible to the tax-man, I have discussed, deliberated and argued with them on the benefits of running your business with proper payment of taxes.
Though it is a sad observation that the sections of businessmen who revert to tax evasion and resistance to technology for fear of taxes make up for a larger section of my interactions, it does bring up the question as to the reasons why most of these business guys would do so.
Multiple taxations, taxation even on business loss, harassment by officials and reduction of profitability have been common reasons that I have heard as the reason for such practices.

The inception of VAT in India was the first indication that the Indian government was committed to creating a simpler operating environment and also one that ensures taxation only on profits. Over time, I have observed that VAT did start changing mindsets, but there was much more to be done; different states had different VAT % for the same product; local sales was to be paid to the state governments and cross state taxes were to be paid to the central government. Add local taxes like Octroi into the mix and the result was that the picture needed to be even simpler.

Leaving aside the politics of the actual visionaries of GST, it is commendable to see that consecutive governments that taken the torch ahead and the nation stands on the cusp of beginning the era of Goods and Service Tax, aka GST.
Simplified single taxation percentages for each product across the span of the country and abolishing of all state border taxes etc should definitely go a long way in making it simpler and easier to be a tax paying business.
Though many argue that the taxation percentages finalized are higher than the current tax slabs, it should be noted that the abolishing of all the other taxes that are added to the cost of the product before reaching the eventual consumer will help in the overall reduction in the cost of commodities.

In other words, if I was paying Rs 5 for something costing me Rs 100 (total 105), I will be paying Rs 8 for the same product which will now cost Rs 95 (total 103). However, such an impact will be gradual in coming to the fore but will have a long-term benefit for the customers.
Coming to the confused businessmen with whom I started the blog, the following factors become decisive:

  • It is no more an option to run your business outside the gambit of the tax regime
  • Saying “no” to software won’t provide with the generation of data necessary for working as per the system just can’t be generated using manual effort.
  • It is in the best interest of your business to be a part of the movement towards transparent business.

Having spent a decade guiding various organizations to gradually incorporate correct taxation into their business, the solutions powered by the Vasthra platform can help your businesses incorporate complete compliance to GST in the easiest possible manner.

The winds of change are around the corner (July 1st, 2017 to be precise) and the wise businessman will ensure he is equipped to ride the wind to greater heights rather than being torn apart.

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