The taxing life of Solopreneurs  

Solopreneurs or small entrepreneurs are on no one’s priority list. We do not have an organised agency representing us at the finance ministry.
Image used for representational purpose only. (File Photo)
Image used for representational purpose only. (File Photo)

It is that time of the year when we ensure that the tax deducted at source matches the one in the 26 AS statement. My taxes are deducted throughout the year as I receive payments. Still, the final updates in the income tax records usually happen around June or even July, when the last date for filing returns is close enough. 

As a small solopreneur, I am ready with all my data in April. After that, it is all about waiting and chasing. Usually, waiting happens in the case of banks, which, despite all the automation, take their time to put the final numbers in place. Chasing happens with government agencies I end up working with. They love working last minute. Private organisations are mostly well organised but for an unlucky encounter. 

Publishers are, more often than not, always late. Why is the onus of ensuring that TDS reflects in your tax statement with the one whose tax is deducted at source? I know it is an offence at the end of the one who deducts and does not pay, but the onus of ensuring this is mine when I have no control over the paying agency. My choices are to fight it out and lose my precious time, energy and health or end up paying additional taxes on the net income I have received. This creates another loop of re-filing the income tax return as and when my statement reflects the TDS.

Technology can easily solve this. Instant updates in the tax statement as soon as the vendor account is credited should be mandatory. Why is this still held back for month-end, quarter-end, year-end and sometimes even after that? Not just the life of solopreneurs and taxpayers in general, it will also ease a lot of work for the Income Tax department. 

While I am still collating all possible tax information for the previous financial year, it is time to pay my advance tax’s first instalment. Within two months of the start of the financial year, I am expected to know the estimated tax liability for the whole year. Even the legacy businesses do not have a handle on the earnings for the whole of next year, but nonetheless, something must be paid. Can this be reduced to twice yearly, say in September and January? If you can clean up the TDS data, I can file my returns in April or May and let go of the hassle of doing all calculations in March and then again a couple of months later. 

Solopreneurs or small entrepreneurs are on no one’s priority list. We do not have an organised agency representing us at the finance ministry. It is impossible to organise, as freelancers and small service providers work in such vast domains that putting them under one umbrella is difficult. They mostly work from home or in small offices. Secondly, as small entrepreneurs, they end up doing everything themselves, from marketing to execution to accounting, leaving them little time and energy to go networking beyond what is required for their core work. 

Many solopreneurs work as freelancers where projects and hence income is unpredictable. Thankfully internet enables us to work across borders with ease. Banks, though, create their checks and balances for every payment received. When they asked me to fill out a form for small payments I receive from Google every month, I changed my setting to receive payments only once or twice a year. But I wonder if banks cannot distinguish millions of such small payments from the best-known company in the world from potentially fraudulent ones. My ease is no one’s responsibility or priority. 

Keeping yourself abreast of constant changes in the tax structures is a constant challenge. While the government tries to present it as simplification, the added or modified slabs in the tax rates are not. On a lighter note, the finance ministry seems to be working hugely in favour of the CA community by making things complex yearly. 

In the Mahabharata and other Indian scriptures, the recommended tax rate is one-sixth of the income, roughly 17%. Why are we paying almost double that amount, not considering the GST we pay on every product and service we purchase?

On top of that, all the government schemes exclude me because I am a tax-paying citizen. For example, take the free bus ride for women in Karnataka. It seems like incentivising those who do not pay taxes.
Should you not reverse this situation and provide schemes benefitting those who pay taxes? This would reward the honest taxpayer and encourage others to start paying taxes. What if I knew that if I am paying taxes in the highest tax bracket, I would get some units of electricity free or credit on my mobility card to use public transport or access premium lounges at airports? It sounds counter-intuitive, given how we have seen the rich-poor divide. However, introducing something like TCS for high-value foreign transactions proves my point. The government schemes and tax structures encourage us to stay, or at least project being poor.  

If someone in the precincts of the Finance Ministry ends up reading this, please consider easing our lives in your next budget planning in the spirit of small is beautiful.

Author and founder of IndiTales
(Tweets @anuradhagoyal)

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