Blockchain technology is slowly getting in all the sectors of trade apart from cryptocurrency. It had been there for 90’s but gained huge popularity with the rise of Bitcoin in the market. The Indian market has made a huge mark with the beginning of blockchain projects lately. However, there was another remarkable decision of imposing Goods and Services Tax (GST) taken by the government last year. There seems to be an underlying connection to relate the two for making a robust tax system.
Over the last few decades, various amendments have been done to improvise tax system. All the countries of the world have made improvisations according to their geopolitical structure. One stage of this was an implementation of VAT which was levied in 1960. The idea behind this was to generate utmost revenue at all stages of supply of goods and services. As of now, approximately 160 nations in the world have rolled out their VAT models.
Blockchain & GST: Can They Work Together?
According to Daily Pioneer, it is a pretty difficult task to manage such huge data of tax in multiple fields. This is where blockchain technology is emerging as a promising player to handle such queries. First of all, the tax has been considered as a dynamic matter with so many criteria’s to be considered. Particularly, the India tax model is based on the enhancement of socio-welfare measures of the citizens.
Similarly, GST was a new transition for the Indian tax system which has a huge challenge of handling data and the IT system. This is where blockchain can possibly make its way into India bureaucracy. It has a modified crypto digital ledger which retains information in form of blocks. Furthermore, the distributed ledgers are efficient, transparent and more secure. The information flow can be tracked from an end-to-end basis in real-time.
Another feature of blockchain is that it can derive and design tax invoices which will reduce the issues like filing returns and claiming ITC.
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