- 7 weeks to go before implementation of nationwide Goods and Services Tax
- Global firms helping their clients' transition to GST in phases
- Businesses seen spending double on accounting services in GST first year
With seven weeks to go before the nationwide Goods and Services Tax is implemented, Indian companies are rushing to bring in experts to help prepare their 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 150 billion rupees ($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 July 1.
"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 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.
"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 July 1, let alone India's 40 million small-scale enterprises, 70 percent 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 10 billion rupees in revenue typically spend 6 million-to-10 million rupees 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.
© 2017 Bloomberg L.P
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