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Thursday, June 1, 2023

How compliance and tax continue to be a struggle for Bharatiya businesses

Until you actually run a business in Bharat, it’s very hard to understand how much of an entrepreneur’s time here goes in just making sure they are compliant with all laws and are paying each tax correctly and on time.

Bharat goes out of its way to make this a struggle.

My favourite example of this was from Mihir Sharma’s book Restart

If you run a restaurant in India – the Excise department had a rule which says you can have only one entrance/exit whereas the fire department said you have to have minimum 2. So you have to bribe at least one.

Another one was different GST rates on almonds and cashews. So no one knew how much GST to charge on a packet of mix-dry fruits. They had to bring out a clarification for this in one of the GST meetings.

One more – Every VC running an AIF in Bharat doesn’t know if they will have to pay only Capital Gains tax on their Carry or they have to pay GST also. This was being contested in court (not sure if resolved)

Imagine literally birthing an entire startup ecosystem, pumping Billions into a country only to find yourself litigating over what tax was owed on your biggest exit 5 years after it happened.

(This article has been compiled from the tweet thread originally tweeted by Kushal Bhagia (@kushalbhagia) on July 30, 2022.)

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