GST implementation will overhaul the way India transacts

India Infoline News Service | Mumbai | January 03, 2017 11:12 IST

The budget for FY17-18 is a golden opportunity for the GoI to provide an impetus to the digital dream.

The budget for FY17-18 is a golden opportunity for the GoI to provide an impetus to the digital dream. Significantly simplifying the tax laws, by dropping exemptions and using a graded taxation method (10%, 15%, 20% etc.) for businesses based on net profit would go a long way to incentivize tax compliance. It would dispel the need for businesses to keep transactions off the book to avoid payment of taxes. Depending on the tax collections the Government could each year increase the thresholds for taxation and reduce the rates.

Further, the GoI should also mandate that businesses would be entitled to claim expenses as tax deductions only if such expenses are made through banking or other electronic means. All businesses could be provided a 6 month - 1 year window to put in place appropriate processes and systems. With GST around the corner, changes to the direct tax regime would provide a comprehensive overhaul to the way India transacts.

The author, Ajay Joseph, Partner – Lakshmikumaran & Sridharan Law Firm.

 

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