Ease of Doing Business


Recent years we heard about this term of Ease of doing business and think that this happens in real terms and the doing of business is easy in practical terms. There are two thoughts in this process one is it is easier to do the business in comparison of recent past and another is it is easy to start the new business. The thoughts and its implication in my mind about this terms is enumerated as follows.

The factors which considered for Ease of Doing Business are,

GST:

One Act ,one Registration, compliance based, simple rules, easy procedures and elimination of various acts and multiciplity of their application. The basic Acts consolidated under GST are Excise & Customs, Service
Tax, and State VAT & CSTand some state allied acts like Luxury & Entertainment Tax Act etc. applicable for levy of the Taxes.

However, the basics of Ease available in the merged Acts seems to be not carried forward in the GST.

Returns:

  • Service Tax Returns to be filed half yearly.
  • VAT on the basis of Turnover.
  • Excise Quarterly Returns.
  • All Returns in prescribed form only.
  • GST Three Returns per month and Annual Return for consolidation.

Revised Returns:

All Earlier merged Acts have provision of revised Returns. The Revision, Rejoinder, is the basic for wider compliance based Acts. In GST no revision of any returns.

Payment of Tax:

In Service Tax under Rule 6, The tax is to be paid on Receipt basis for those having turnover Up to Rs.50/- lacs. GST the Tax to be paid on accrual basis.

TDS Provisions: TDS provisions are applicable to the Some State Acts like Works Contract Act.

GST wider TDS Provisions.
The thought of EASE will be.

Returns:
Minimum Returns and maximum time for compliance available in merge Acts before GST.

Revised Returns.
Ample opportunity all the time to revise the return before the assessment. Revision will not necessary means evasion.

Payment of Tax:
The limit of payment of Tax on Receipt basis should be increased to maximum limit of composition turnover applicability.

TDS Provisions.
Minimum Rate and very few coverage of applicability.

The State Acts.
The Profession Tax Act, and the residue states acts should be merged and the compliance will be easy.

Income Tax Act:

Tax Audit.

The earlier Income Tax Act has provision of Tax Audit u/s 44AB only on the basis of Turnover applicable to Trade, Mfg and Services like Consultancy etc.

The new provision of Sec 44AB also applicable to certain professionals on the basis of their profitability irrespective of their Turnover as such if a Chartered Accountants has started his professional practice and having fees of say Rs.5/- lacs in the first year of practice. And he is not able to earn profit of Rs.2.5/- lacs, he has to get his accounts audited. Similar is the case for other professions.

Filing of Returns.

The great olden days, we were able to file returns for the last three years. Thereafter for last two years without any penalty with interest on the tax due. Presently you have to file the returns on time and there are penalties
prescribed for the late filing forget filing of earlier years.

Presumptive Taxation 44ADA

High percentage of profit disclosure to avail presumptive taxation. Compulsory 05 years to remain once opted for the presumptive taxation.

The thought of EASE will be Tax Audit.

Audit should be based on Turnover and not compulsory declaration or not declaration of the net profit. The threshold limit should remain the same as applicable under the other acts like GST.

Filing of Returns.

For Compliance based taxation, there should have been no restriction on filing of any returns for n number of years before the assessment proceeding begins. The compliance based taxation has no place for penalties for either late or not filing. There seems to be no restriction on the revision of the returns. Once the return is filed the rest of the provisions of the law will follow.

Presumptive Taxation 44ADA

The applicability should be on year to year basis as nothing is predictable. The percentage of profit be less than the average profit of the filed returns for the previous year for the particular type of business activity.

The thought of EASE will be.
What I thought of EASE of Doing business will be.

Allied Acts.

No Shops & Establishment Act and Registration under profession tax and or any other Act like GST etc. for first two years provided. Regis rated yourself with MSME online. With self-declaration to the effect that,

a) Turnover less than or equal to Rs.50/- lacs.
b) The total number of persons employed less than 10.

Income Tax Act.

Non Applicability of TDS provisions to all type of assesses.  Presumptive taxation to the extent of 10% of the Turnover having option every year for the first two years.

All the registration under the various acts of either Central or State Govt, or Municipal Corporation are optional except business related to health, food and Drugs.

Conclusion:

Though the Term of EASE To DO BUSINESS just begin and yet to take shape in days to come. The begin of such a thought is also a step in the right direction. Better late than Never. The Child namely EASE has to do the
BUSINESS in real terms to grow FOR the nation.

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CA Satish Badve 
on 10 October 2018
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