The humble pani puri vendor, a ubiquitous sight in Indian streets, has recently found himself in the limelight after his digital payment transactions exceeded Rs 40 lakh, triggering scrutiny from the tax authorities. This episode highlights the complexities of the Goods and Services Tax (GST) regime in India, especially for small businesses and street vendors.
GST, introduced in 2017, is a comprehensive tax levied on the supply of goods and services. However, the GST regime has faced criticism for its complexity and compliance burden, particularly for small businesses. Many street vendors, who operate on a small scale and lack formal accounting systems, find it challenging to comply with GST regulations.
Excessive Fines
Non-compliance with GST can result in hefty fines and penalties. For example, the pani puri vendor in question was fined Rs 2.5 lakh for failing to file GST returns on time. Such excessive fines can be crippling for small businesses, which often operate on thin margins.
Complex Procedures
The GST compliance process involves multiple steps, including registration, filing returns, and maintaining invoices. These procedures can be time-consuming and require a certain level of financial literacy, which many street vendors may not possess.
The pani puri vendor, who operates in Mumbai's Borivali area, has become the face of the challenges faced by street vendors under GST. His digital payment transactions exceeded Rs 40 lakh, which triggered a GST audit by the authorities.
Discrepancies in Accounts
During the audit, discrepancies were found in the vendor's account books, leading to allegations of tax evasion. The vendor reportedly failed to account for all his sales and maintain proper invoices.
Cash Transactions
The vendor admitted to accepting cash payments in addition to digital transactions. Cash payments are not taxable under GST, which raises concerns about the vendor's compliance with the law.
Vendor's Perspective
The vendor has claimed that he was unaware of the complexities of GST and did not intentionally evade taxes. He has expressed willingness to cooperate with the authorities and pay the due taxes.
Tax Authorities' Perspective
The tax authorities maintain that all businesses, regardless of size, are required to comply with GST regulations. They argue that street vendors are not exempt from paying taxes and must fulfill their responsibilities.
Economist's Perspective
Economists have emphasized the need for a simplified GST regime that caters to the unique needs of small businesses and street vendors. They suggest introducing a simplified tax system or providing exemptions for businesses below a certain turnover threshold.
The case of the pani puri vendor highlights the complexities of GST implementation for small businesses and street vendors. The government must address the challenges faced by these vendors, such as excessive fines, complex procedures, and a lack of financial literacy. Simplification of the GST regime and targeted support for small businesses is essential to ensure equity and compliance.
The street food sector is a significant contributor to the Indian economy, providing employment and generating revenue. However, if GST compliance remains a major challenge for street vendors, it could lead to a decline in their businesses, affecting the livelihood of millions of people. Moreover, it could also result in a loss of tax revenue for the government.
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