CHENNAI: At the stroke of the midnight hour, when the world sleeps, India will awake to a new tax regime. For tax consultants, the last couple of weeks has been nothing short of a whirlwind. With Goods and Services Tax (GST) being implemented from July 1, they’re gearing up for a turbulent period where the questions will increase and the answers will be hard to come by.
“I am constantly on the phone and my phone charger is my lifesaver,” said S Ramkumar, Head of Risk Advisory Services & Consulting at Sundaram & Srinivasan Chartered Accountants. “The change has made a lot of people nervous. The awareness and preparedness to complement a tax reform of this magnitude are lacking. That is partly why our clients went up from 150 to nearly 1,000 in the last 10 days.”
He attributed this to people assuming the date for implementation would be pushed further.
“Most of the clients are small players,” said Ramkumar. “They are unaware of the procedure and are seeking advice to register themselves and come within the ambit of the GST system. According to Section 9 (4) of the GST Act, the government has said unregistered small players need not get registered. However, aside from larger players, even registered traders would prefer a registered player over an unregistered one.”
Depending on the size of the company, their preparedness to deal with the situation differs.
“We have been preparing for this ever since the draft bill was released,” said Shankar Menon, Director at Chakiat Agencies. “We did reach out to a few advisers, but most of the study has been done internally. Our view is that medium and large companies will sail through this change with some challenges but small players could take a beating during this transition period.”
The sense of nervousness and uncertainty is palpable.
“There is a sense of uncertainty because, with GST, the answers have been quite hard to come by,” said Abhyuday Purkayastha, Brand Manager at Viari and Bayleaf. “We have a small finance team but have spoken to around 10 different tax consultants. Even so, there is still a lot of ambiguity. We are just keeping ourselves clued in on every update the government puts out and consulting others in the business.”
A number of unresolved issues on the government portal is only adding to consultants’ woes.
“I am panicking,” said N Sacchidanand, Principal Consultant at Bhuva Tax Consultants. “There are constant changes happening on the registration site and so many technical glitches too. I have 20 more registrations to do and at this pace, I don’t know if they will all happen by July 1.”
A number of clients have asked about the benefits they will derive from input tax credit, consultants said. However, they echoed Purkayastha’s sentiment when he said that the benefit of input tax credit can only be passed on to customers if there is complete compliance on the part of vendors and suppliers in the system.
“It won’t be a simple transition,” Purkayastha said. “Prices may fluctuate and there may be a momentary dip in business, but we perceive that GST will provide long-term benefit. However, the only way this system-driven approach will work is if everyone in the supply chain is compliant.”