India Inc gears for compliance costs
However, over a period of two years from the time of roll out of GST, tax experts expect compliances costs to come down as the new tax system stabilises
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Corporate India's compliance and legal costs are set to go up substantially over the next 12 to 18 months, as companies and businesses gear up to be goods and services tax (GST)-ready.
With eight months to go for GST roll-out - likely in April, 2017- businesses have to get their information technology (IT) and accounting systems ready for the new indirect tax system, train personnel, suppliers and vendors, to be fully compliant of the GST processes.
However, over a period of two years from the time of roll out of GST, tax experts expect compliances costs to come down as the new tax system stabilises.
"There will an initial cost for businesses to be GST-ready," says Rakesh Nangia, managing director, Nangia & Co. For large and mid-sized businesses, this would mean reorienting their IT systems, training personnel, and making their suppliers and vendors GST-compliant.
Nidhi Goyal, managing director - tax and regulatory affairs, Protiviti Global, points out that many companies that had started the process last year had to slow down as there was no clear transition road map.
Tax experts point out that being GST-ready is not a one-time cost for businesses but a recurring one. "They would need to maintain a team to ensure that all compliances are in place," says Goyal.
Nangia notes that that compliances burden is likely to be high for small traders and businesses that would face the heat of filing innumerable returns online. "They would first have to invest in IT systems and processes to get up to speed," says Nangia. Moreover, business entities working in Tier-I and -II cities and in rural areas may not have easy access to computers and the technical skills to comply with online returns.
Experts point out that under the draft model GST law, there will be enhanced role for chartered accountants and tax consultants to audit whether businesses are tax compliant. "Increased compliances requirement in the form of number of returns required, challenge in transition to the new regime, etc. would definitely require a professional hand for adherence," said Institute of Chartered Accountants of India in a statement.
With eight months to go for GST roll-out - likely in April, 2017- businesses have to get their information technology (IT) and accounting systems ready for the new indirect tax system, train personnel, suppliers and vendors, to be fully compliant of the GST processes.
However, over a period of two years from the time of roll out of GST, tax experts expect compliances costs to come down as the new tax system stabilises.
"There will an initial cost for businesses to be GST-ready," says Rakesh Nangia, managing director, Nangia & Co. For large and mid-sized businesses, this would mean reorienting their IT systems, training personnel, and making their suppliers and vendors GST-compliant.
Nidhi Goyal, managing director - tax and regulatory affairs, Protiviti Global, points out that many companies that had started the process last year had to slow down as there was no clear transition road map.
Tax experts point out that being GST-ready is not a one-time cost for businesses but a recurring one. "They would need to maintain a team to ensure that all compliances are in place," says Goyal.
Nangia notes that that compliances burden is likely to be high for small traders and businesses that would face the heat of filing innumerable returns online. "They would first have to invest in IT systems and processes to get up to speed," says Nangia. Moreover, business entities working in Tier-I and -II cities and in rural areas may not have easy access to computers and the technical skills to comply with online returns.
Experts point out that under the draft model GST law, there will be enhanced role for chartered accountants and tax consultants to audit whether businesses are tax compliant. "Increased compliances requirement in the form of number of returns required, challenge in transition to the new regime, etc. would definitely require a professional hand for adherence," said Institute of Chartered Accountants of India in a statement.
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First Published: Aug 05 2016 | 12:16 AM IST