An entrepreneur needs to know about the basic tax structure of the country, as well as, the state, so that he can assess his obligations towards this head in the following conditions:
- In business, one might be required to act as a collection agent for the government and collect taxes from employees, service providers, vendors, customers/ clients, etc.
- As a businessman/ woman, one might have to pay taxes on purchases, sales and services (sales tax or VAT, service tax, excise, etc). If one is importing raw material, then custom duty and related items need to be paid and included in the cost of goods sold.
- For an export house, the duty paid on any imported material may be eligible for Duty Drawback. In this case, one does not include the custom duty in the cost of goods sold.
World of Caution for the Entrepreneur: The details of the taxes levied by the government in terms of quantum, exemption, exceptions, etc, are vast and also keep changing from year-to-year. So, an entrepreneur should take expert guidance on these matters from professionals, such as, chartered accountants or tax planners. An entrepreneur should also be aware as to which tax he is collecting on behalf of the government, which tax can form the part of the cost and which ones are based on profits.
Value communicated by an entrepreneur: By making timely payment of taxes, an entrepreneur shows regard for the rules and regulations of the country and also exhibits his/ her keenness to contribute for the economic development of the country.