Dia Rekhi @ Chennai
At the stroke of the midnight hour, when the world sleeps, India will awake to a new tax regime. However, for tax consultants who have been burning the midnight oil to keep up with client queries and government notifications, the last couple of weeks have been nothing short of a whirlwind. However, with Goods and Services Tax (GST) being implemented from July 1, they’re gearing up for a turbulent period. The beginning of many more sleepless nights as the questions are only expected to increase and the answers hard to come by.
Numerous people who were previously outside the realm of formal taxation began seeking professional advice to smoothen the transition into the post-GST era. Consultants concede that copious amounts of caffeine and the fear of giving wrong advice are the two things that have kept them on their toes throughout.
“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 in the tax regime has made a lot of people nervous. The awareness and preparedness that needs to complement a tax reform of this magnitude are lacking. That is partly the reason why our registered clients went up from 150 to nearly 1,000 in the last 10 days alone.”
Ramkumar said the primary reason for the spike in clients was that many were convinced that 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 scale and size of the company, their preparedness to deal with the situation differs. While larger companies can boast of a fully equipped tax department, not everyone can. Hence, the dependence on independent tax consultants.
“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, as we have a full-fledged tax department that looks into these matters. Our view is that medium & large companies will sail through this change with some challenges but small players, who may not have access to prudent financial advice and resources, could take a beating during this transitional period.”
The sense of nervousness and uncertainty, however, is palpable and omnipresent.
“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 to get a better idea of the provisions and procedure. Even so, there is a lot of ambiguity, especially in terms of the regulations and the by-laws. We are just keeping ourselves clued in on every update the government puts out and consulting others in the business.”
For those who aren’t approaching tax consultants, relying on peers is among the primary alternatives.
“I don’t trust consultants,” said the proprietor of a mid-size company in the city on the condition of anonymity. “There is no guarantee that they have a better understanding of the whole process than we do. Besides, if they go wrong, we pay the price, they don’t. I am solely relying on friends and competitors in the industry to help me through this process.”
However, it is not just the sudden surge in clients that is keeping consultants awake. Many said there are a number of unresolved issues on the government portal that hasn’t been resolved.
“There is only one day left and I am panicking,” said N Sacchidanand, Principal Consultant at Bhuva Tax Consultants. “There are constant changes happening on the registration site. In addition, digital signatures are not accepted and there are a number of glitches when trying to retrieve personal information from Aadhaar cards. I have 20 more registrations to do and at this pace, I don’t know if they will all happen by July 1.”
Among all the questions being asked, 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.”