“The toughest thing to fully grasp is income tax,” said Albert Einstein. Why can’t even the intelligent brains understand taxes?
Moreover, surprisingly, all our lives are about taxes? We earn, we pay tax, we pay tax, we buy, we pay tax, we make investments, we pay taxes, we pay a gift tax! Moreover, the principles of tax collection and the comparison of the Indian tax system are discussed.
Walking by economics books, tax imposing is an art in itself. It’s not like one can arbitrarily request for some number, or demand to deposit it somewhere.
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A framework needs to be in a place that makes clear what every aspect of the financial system should be doing. Any system’s usefulness lies in its administration.
The Features of a Simpler Tax System are:
Clarity
Clear, simple, and above all, unambiguous: this is the secret to a productive program. The clearer the rules are, the easier it is to abide by. If one has a complicated set of rules, a lot of mistakes will result. Errors in any tax scheme are penalized. The system will potentially end up punishing someone who was honest about his intentions.
Globally, officials have just applied the sophistication of the in-laws to tax terrorism.
Additionally, there will be some openings in this intricate maze to be found; leaving tax departments and courts puzzled.
It’s also necessary for the tax officers to understand their work. The GST bill passed in Parliament ‘s Budget Session was implemented on July 1 of the same year. The country had very little than three months to train its 10-plus lakh officials around the world! The payer and the administrators were both inexperienced at the time the tax system was in effect.
Last but not least they should be entrepreneurs, not CAs. Complicated legislation would be unacceptable to those who, like the rich, can not afford medical support. Those with simple company need to be taxed more clearly.
Stability
When under a system the tax laws do not alter constantly. The tax rates on profits will remain stable, so that market players can act properly. In economics, this is called the ‘Menu Rate.’ Claim a restaurant kitchen is priced at €1100 today. Tomorrow’s 2 percent tax will be paid, it will be ~102. It’s paid at 5 percent next week, now it’s ~105. The government receives a 2 percent subsidy the other week and it’s now around $998. Every other week the restaurant has to pay the expense of reprinting menus! It is here that GST will look forward to it. Deciding things, experimenting small at first, and then introducing big things so that they live for long and remain reliable.
Cost-effectiveness
The government will spend large amounts of money on collecting taxes. They have to pay officers’ wages, maintain the network, manage digital transformation costs and so much more. On the other hand, taxpayers are obliged to pay a CA charge for filing taxes.
It is one of the major reasons why GST collections fall short of their target by as much as 33 percent.
This cost of tax levy and tax collection should be high. The government would be able to save its funds while the taxpayers would be able to spend more or give their customers a price break.
Convenience
As organizations expand, they are expected to pay more tax. However, their profits are subject to the amount of tax one may pay. Nations will ensure they give their citizens enough time. They must also ensure payment is made in installments. Luckily the GST is winning full marks here.
Conclusion
Almost all of the topic was what conventional economics says about taxes, but some may see that even after 2000 years, from Chanakya to Adam Smith, it is quite related. One might discover all of these pillars seemingly intertwined with one another. While setting all these things in place is a tough task, over these yardsticks the government has to measure its reforms and GST slabs time and time again. All that has been said and understood can point to both: GST reform failure, or service tax huge success. Given all this, merely two things are certain, according to Daniel Defoe,—death and taxes.
