We should be aware that taxes are collected only to give services to the public and their life upliftment & overall development of the country. The taxes collected by govt is spent on welfare of the people. If by giving certain exemptions, this objective is achieved in a better manner, then why exemptions should not be given? It is well known that amt spent by govt on development etc, causes huge wastage of money because of existance of huge corruptions, mismanagement of resources, highly misguided & misdirected welfare schemes and lot more. By giving certain exemptions, tax will not come to govt but directly spent among the people who are working. Wastage of resources will be reduced drastically.
Secondly, the govt alone cannot manage overall economy. People's support should be there. By allowing them to do business independently and scatterdly through out india, mass employment is generated which otherwise is not possible in big industrial houses. The mass employment means giving employment to crores of people.
Thirdly, all the input raw materials are not having input tax. We really may not know that thousands of articles which are used as inputs are either agro based, or purchased from small vendors which are not even VAT regd. After purchasing these, value addition is done and sold in market without the excise but with state VAT. If they are made to pay taxes on par with big entities, they will not be able to compete with them. The matter is not much about input tax credit, but about output tax payable.
This has to be remembered that big houses always try to maximise the profits. When ever any chance they get, they try to reduce the labour by employing the technology etc. If the basic exemptions was not required, then why it was slowly increased to 1.5 crores. Due to this reason only productivity and GDP of our country has increased trmendously. This itself is a proof that exemptions are required. How ever it is admitted that the issue is debatable and should be honestly addressed to with clear foresight.
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