First, let us
analyse the three direct tax steps and try to understand how this help
entrepreneurs of India.
· The rate of TDS has been decreased by 25%. Thus
this will decrease the quantum of TDS and increase the cash flow for the
business especially service sector. However, there will be no reduction
in the quantum of tax payable by entrepreneurs and thus they have an increasing
burden of advance tax liability. Further, the decline in tax rate is in the
middle of a month and hence different rates being applicable in a quarter. This
already bring confusion among deductor and also they will find difficult to
file TDS return. We should be hopeful that deductors should not slap with
tax demand and penalty due to small errors in TDS compliances.
· Income tax refund to be sanctioned at the earliest
other than the corporate taxpayer. I am unable to understand how the
grant of refund is financial assistance from the government. A tax refund
is an eligible right of the taxpayer and there is an already delay made by the
government to issue the refund to the taxpayers. Further, unable to
understand why the government wants to defer a tax refund of the corporate
taxpayer.
· Extending all Income tax due dates to November 30,
2020. Frankly speaking during this lockdown phase I exactly don’t
know due dates of any compliances as almost all due dates are extended again
& again and there is no one place in government portal where all
information is updated. Further again here unable to understand how
extending due dates will provide financial assistance to entrepreneurs. Now
full-year compliances are due during festivals months and it will be an
challenge for professionals to do that. Also, an extension of due dates
will defer the invoicing of professionals and they may have cash flow issue due
to this.
· The government also extended the due date of Vivid
se scheme scheme till December 31, 2020. Now, this also creates
confusion. According to me due date of filing application is December 31, 2020
and according to tax officials, the last date of making application is June 30,
2020 and December 31, 2020 is the last date of disposal of the application.
· The government also extended due dates of task to
be done by tax department like completion of assessments etc. Now government
can hold the refund of the companies till the time assessment gets completed.
Thus, from above it can be concluded that captioned three direct tax
measures is not providing any financials assistance to entrepreneurs.
Also, the rate
of PF contributions by employers and employee is reduced from 12 % to 10%. Now
let understand the impact of the same. Now employee will take home salary will
increase but this will also increase tax liability of the employees. Further,
there will be less contribution in the PF account of the employees and
ultimately this action of government is making a loss to all employees of the
nation.
The MSME now
can avail the additional loan without any collateral. The quantum of
collateral-free loan is 20% of the existing credit limit. From the
following can be concluded.
· This facility available to MSME and not to others.
· The MSME must have an existing loan. If there is no
existing loan then MSME cannot opt for any loan without security.
· There is no relief in interest or payment schedule
of loan repayment.
· Over leveraged Businesses get more loans than
prudent Businesses.
Further, I am
also unable to understand how a change in the definition of MSME can be
considered as financial assistance to the entrepreneurs.
We must say
that steps like equity infusion, restrictions of global tenders are
appreciating steps as same will help small entrepreneurs of the country. The
government should take more such kind of steps which actually help
entrepreneurs.
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