The Goods and Services Tax (GST) was recently passed in both upper and lower houses of Parliament. However, small business people are very nervous since the GST bill reportedly imposes a retro tax. It is difficult for the businesses to escape from the eyes of taxmen if the new law is implemented.
Since the cut-off date given by the government for the black money ends by this month, many business people are under some sort of fear. Interestingly, Prime Minister Narendra Modi himself pointed out during his speech on GST that the current system can be abused.
In his address on the floor of Lok Sabha on August 8, Modi said that we know how the system of kacha bill and pakka (fake and real) bills operate. But GST will bring an end to the fake bills as traders will provide the real bills and accounts so that they benefit from the input tax credit. Moreover, all manufacturers, distributors, and retail chains should register on the GST network.
GST system captures evasions easily
Expected to be rolled out in April 2017, once you have captured in the GST system, taxmen will be able to make an assessment of the expected income and evasion occurred over the past few years.
GST bill will impact Income Tax
Responding to media, a reputed tax head at a consultancy firm pointed out that GST will not only impact the indirect tax collection but also the income tax collections. This is because this is only tool using which officials will be able to calculate incomes of people against the total income tax paid by them.
Business people under fear for past evasions
During the sidelines of a retailer meeting in Mumbai in August, many business people have posed queries before experts whether the Government would target them for not paying the taxes in the past.
According to sources, few business magnets have been prompted to disclose assets under the income declaration scheme (IDS) before September 30. In addition to avoiding bills, under invoicing and over invoicing are also typically used to escape taxes.
Commenting on the Tax evasion, Bharat Goenka, managing director of Tally Solutions said that businessmen commit unilateral and bilateral mistakes. He said that his team is currently working on to updating the Tally software to incorporate the changes in the GST.
The finance ministry should ensure that GST bill should not be abused to target small business traders.