Which of the following is/are the criteria for the formality or informality of a firm?
1. Provision for Social Security to the employees.
2. When firms are part of tax net.
3. When firms are registered under the GST.
Which of the following is/are the criteria for the formality or informality of a firm?
1. Provision for Social Security to the employees.
2. When firms are part of tax net.
3. When firms are registered under the GST.
The correct option is D Only 1 and 2
Informality or rather formality can be defined in at least two senses. First, when firms are providing some kind of social security to employees. In India, government provides this for its employees, and the Employees’ Provident Fund Organization (EPFO) provides it to private sector employees in respect of pensions and provident funds; and the Employees’ State Insurance Corporation (ESIC) in respect of medical benefits. A second definition of formality is when firms are part of the tax net. Since new data on the GST is available, one can define tax formality as firms having registered under the GST.
Only 1 and 2
Informality or rather formality can be defined in at least two senses. First, when firms are providing some kind of social security to employees. In India, government provides this for its employees, and the Employees’ Provident Fund Organization (EPFO) provides it to private sector employees in respect of pensions and provident funds; and the Employees’ State Insurance Corporation (ESIC) in respect of medical benefits. A second definition of formality is when firms are part of the tax net. Since new data on the GST is available, one can define tax formality as firms having registered under the GST.
