Yes, our government is killing small businesses. On one hand, our great leaders keep saying that people should not just look for government jobs, be innovative, be entrepreneurs and make a difference.
But, the actions of the government do not justify the statements. I am really at a loss at one of the changes to service tax starting this financial year.
Earlier, the companies used to pay the service tax on realization of the invoiced revenue. Now, wether you have been paid or not, once the invoice is raised, you have to pay the service tax component to the government. Now, come on, most of us know that there is not one single customer (well, at least this is what I have seen throughout my career), who will pay immediately on presentment of an invoice. Sometimes, the payments take few months.
If you look at the account receivables, in all probability, the receivables will be anywhere between 3-6 months. How will companies servive with so much outstandings and on top of that keep paying the government the money they have not even seen and in some cases are not even sure that they are going to get (bad debts)?
The big companies have the financial muscle and it may not matter to them but surely the small businesses are hurt by this draconian changes to the service tax law. God help the small businesses.
Thanks
Srinath
But, the actions of the government do not justify the statements. I am really at a loss at one of the changes to service tax starting this financial year.
Earlier, the companies used to pay the service tax on realization of the invoiced revenue. Now, wether you have been paid or not, once the invoice is raised, you have to pay the service tax component to the government. Now, come on, most of us know that there is not one single customer (well, at least this is what I have seen throughout my career), who will pay immediately on presentment of an invoice. Sometimes, the payments take few months.
If you look at the account receivables, in all probability, the receivables will be anywhere between 3-6 months. How will companies servive with so much outstandings and on top of that keep paying the government the money they have not even seen and in some cases are not even sure that they are going to get (bad debts)?
The big companies have the financial muscle and it may not matter to them but surely the small businesses are hurt by this draconian changes to the service tax law. God help the small businesses.
Thanks
Srinath
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