New Delhi:
What is taxing for some in India has become brisk business for others.
With seven weeks to go before the nationwide goods and services tax
(GST) is implemented, Indian companies are rushing to bring in experts
to help prepare the accounting and information technology systems for
the tax-system overhaul. That’s created a windfall for international
professional services firms, including PricewaterhouseCoopers LLP and
KPMG LLP.
Providing advice on everything from taxation regulations
to business finance will generate as much as Rs15,000 crore($2.3
billion) in extra consulting fees, according to a council member of
India’s accounting regulator, the Institute of Chartered Accountants of
India. PricewaterhouseCoopers said it’s pulled in a specialist from
Australia to help bring Indian companies into compliance with the new
taxation regime, which starts 1 July.
"We are helping our clients’
transition to GST in phases," said Pratik Jain, a partner leading the
firm’s indirect taxes arm in India, in a telephone interview. The firm
has a team focused on GST-driven demand that’s drawing on advice from
abroad "plus a pool of international experts when needed," he said.
Representatives
from Ernst & Young LLP and KPMG said they are also fielding calls
for help from businesses struggling to assess the impact of the GST’s
implementation and how best to implement computer-based systems to
manage their supply chain, procurement and accounting processes.
KPMG India
KPMG
India has a team of more than 1,100 people with skills across GST, IT
and supply chain management to support about 400 clients from a wide
range of industries transition to the new tax system, said Sachin Menon,
a partner and the firm’s national head of indirect taxes. International
experts have also been drawn in to help clients, he said.
The
complex process of converting an economy with more than 1 billion
consumers into a unified, common market has bolstered demand for
enterprise resource planning, or ERP, said Ashish Mittal, co-founder of
EasemyGST, an IT service provider in Gurugram near Delhi.
"We are
in touch with 1,000 companies of which half have agreed to go with us,"
Mittal said. About 200 inquiries were from medium to small businesses,
he said.
Helping companies be fully compliant with the new system
is difficult, as detailed guidelines aren’t yet available to provide the
necessary clarity, PricewaterhouseCoopers’ Jain said.
"Corporate
clients want more detailed guidelines and illustrations based on
specific sectors," he said. So far, clients have indicated that
guidelines for getting credit for taxes paid are more restrictive, and
lack of clarity on registration of taxpayers with multi-state operations
is "a huge issue" under the new system.
Rules
and specific rates of taxation aren’t yet finalized, according to the
council member of the Institute of Chartered Accountants of India, who
asked not to be identified because only the institute’s president is
authorized to speak to the media. Without more granular detail, it will
be impossible for organized industries to comply from 1 July, let alone
India’s 40 million small-scale enterprises, 70% of which are unorganized
and haven’t started the process of readying their businesses, the
member said.
India has about 300,000 sales-tax accounting
practitioners who help mostly small businesses file returns and comply
with tax laws. In addition, there are 150,000 chartered accountants
employed in India of which 80,000 need to be trained, the member said.
Businesses
with more than Rs1,000 crore in revenue typically spend Rs60
lakh-to-Rs1 crore on accounting services, representatives of two
accounting firms said. This cost will probably double at least in the
first year of the GST’s implementation, they said