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How tax and finance

 13 hours ago

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Nandan Nilekani,

navigate the GST

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SHARE The Goods and Services Tax (GST), one of

the biggest tax reforms in Indias history, will  13 hours ago
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Ensuring smooth transition

While analysing the GSTs impact across
various pieces of a business, tax and finance
professionals are also working to achieve
timely registration of the businesses. A unique
registration is required for each place of
business, which means multiple registrations
for a business present across states. It is
crucial that the last tax returns under the old
taxation regime are filed accurately to avoid
any loss of revenue, by disclosing appropriate
CENVAT Credit/ Input tax Credit.

Challenges: Businesses producing tangible

goods will find it easier to be GST-compliant,
as registration can be made based on place of
supply. However, it is complex to ascertain
the place of supply, in cases where supply of
services is across various locations. This
includes industries like event management,
advertising and broadcasting.
 Even for businesses creating tangible goods,
How tax and finance professionals are helping businesses naviga
regime the July 1 date for rolling out the GST is too
brief to correctly assess the inventory and
their value at warehouses and depots across
India. The physical stock will also have to be
analysed to ascertain credit availability, in
accordance with their business and the
category (taxable/ zero-rated/ exempted/
partly in any of it).

Aligning IT systems and accounting

software
The GSTs implementation will necessitate a
massive overhaul of enterprise software and
IT aligned with the new tax provisions, to
enable generating GST invoices. Finance
professionals will need to work closely with
IT departments to understand and extract
various kind of reports, as and when required.
They will also need to organise trainings to
maintain accurate accounting for the GST,
maintaining tax ledgers and upgrade inventory
management software.

Challenges: The time frame for such a

massive overhaul is too short. Making an
enterprise IT assets GST-compatible will
require modification of the entire IT
framework. SMEs and unorganised sectors do
not have adequate IT support and system.
While many companies have independently
created GST invoicing utilities, there are
concerns about the efficiency of these
solutions.
How tax Compliances
and finance professionals are helping businesses naviga
regime The filing of multiple, time-bound returns is a
complex ask for businesses. While finance
professionals are assisting companies to
ensure timely compliances filed by their
registered suppliers, delays in compliance
from the bigger business ecosystem and the
supply chain (including vendors and
distributors) will lead to bigger companies
facing the brunt of the new law.

Challenges: The several types of levies make

compliances difficult for an assessee. There is
forward charge being paid by a taxable person
on the value of the goods and services
supplied by them and reverse charge on goods
and services, in specified cases. Lack of
clarification on categorization of many goods
and services is impeding the ability of finance
advisors in guiding their clients.

Compliances need to be done online, which

can create an over dependency on network
connection, E-Way (though it is deferred for
the time being) will be a great challenge to
comply, to ensure smooth movement of
goods.

Preparing for anti-profiteering

One important thing to do after July 1 will be
for businesses to put anti-profiteering rules on
their post-GST checklist. As soon as the
 methodology emerges, the tax and finance
How tax and finance professionals are helping businesses naviga
regime professionals will need to make sure that their
clients are able to comply.

In the absence of published rules regarding

anti-profiteering these professionals are
already advising clients to be prepared to take
into consideration the impact of tax rate
reduction and input tax credit carefully.
Everything has to be calculated and recorded
carefully. The cost calculations underlying
their pricing decisions must reflect the
transmission of all the elements in the supply
chain.

Challenges: There is no clarity on regulations

and the time for which anti-profiteering will
be applicable. It is difficult to have one-to-one
correlation between expenses incurred and the
products sold. Professionals need to be ready
to institute robust documentation process to
justify the pricing of the product, before and
after GST. It is difficult for tax and
accounting professionals to predetermine an
exact impact assessment on a business or a
product line.

The issue at hand is not the willingness to be

compliant, but the rushed deadline to prepare
for this transition. To withstand this
constraint, advisers must prioritise the various
deliverables for their clients.
 Shireesh Sahai is India CEO at Wolters
How tax and finance professionals are helping businesses naviga
regime Kluwer, a Dutch professional services
provider. Views are personal.

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