Updates and details for GST Tax: Small Business Will Have To Digitize Soon:
On 1st July, as India rolls out its landmark national sales tax, business that make less than 100 million rupees which the government refers to as micro, small and medium enterprises will all have to digitize. The firms, often accused of conducting business mostly in cash and evading taxes by under-reporting income, will for the fist time have to report every transaction, creating an online trail for the tax office.
Currently, many of the transactions by an estimated 51 million small enterprises are carried out in cash, with no trail of sales. This makes it easier for some to under-report revenue.
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The federal government hopes there will be a jump of 14 percent in revenue growth under the new levy as more taxpayers come into the fold of the formal economy and move on to digital modes of payment.
It will bring an unprecedented transparency and create data for almost every monetary transaction in the economy, the government hopes, and this, in turn, will help expand the tax base.
“The transition is going to be very painful,” the country director at the International Growth Centre and India’s former chief statistician, Pronab Sen, said in New Delhi over telephone. “It will take at least two-to-three years for them to settle.”
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