Life of a Storyteller
ARE YOU READY FOR THE GST CHALLENGE?
2017Â
Exceeding Expectations
This widespread impact on the entire organization means that it will impact the competitiveness of your business.
High Revenue Neutral Rate:
After the Goods and Services Tax, The government revenue will not remain the same. Through the Revenue, the Neutral Rate government would try to adjust tax in such a way that its revenue remains the same. If the RNR is kept high, it will have a negative impact on the economy.
Compensation of States:
Revenue loss to the states, especially to manufacturing countries in the short run owing to the reduction in no. of taxes, so, compensation has to be paid to the state for the initial five years.
Threshold Limits:
It will be tough to decide the Threshold limit for the companies/dealers to pay GST. There will be a Lack of agreement on the threshold limit between State Finance Ministers and Union Finance Minister.
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Support in Parliament:
There will be a lack of support in the Upper House and some of the manufacturing states.
Robust Information Technology Network:
The success of the GST depends on robust IT networks connecting central govt., all state govt., Banks, Public and private companies, manufacturers, dealers, etc.
Central has already incorporated an SPV – GSTN, but the real challenge is in some of the states which have a lack of IT Infrastructure.
A vast database needed for registrations, tax, return filing, IGST, CGST, and SGST settlements all over the country.
Extensive training needs to be given to tax administration staff for better GST implementation.
Opportunities for Professionals:
At the Beginning of GST would generate in the short term, a lot of opportunities. Full-time CAs preparing in sales tax and other indirect tax will not be difficult for practitioners and much easier to understand the proposed GST as most of the provisions of the GST bill are determined by VAT/Service Tax/Central Excise provisions. Following are few services, which could be combined with the service basket of practicing CAs in the GST regime, which could be of great value to the business community:
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Fundamental GST impact study –
The launch of GST would have a considerable impact (it could be positive or negative) on the manufacturing, service industry, and trading. The manufacturing sector may find GST’s debut to be positive as cascading taxes would decrease, and overall tax payment would be less related to the present rate of taxes. For a few services, it could be negative as the rate of GST could be 20 %, which is higher than the current service tax rate of 15%. Therefore, the business entities must get a fundamental GST impact study done to determine the impact on the business. CAs would be apt for arranging this service, provided they are well inclined in GST. Shortly, model GST law more few reports on payment, refund, returns, and registration are applicable in the public domain, which could be leaned on for impact study. The impact study report would need to be relooked once other regulations and adjusted GST law is introduced.
Compensation in a transition phase –
After the impact study, CAs could benefit the business entities in the operation of GST during the transition phase. The transition phase could combine identification of eligible credits, Agreements/Modification of Contracts, Suggestions for Modification of ERPs seeing GST requirements, training of vendors if required. ERP operation could well be a separate service as GST would be executed through full automation and manual intervention would be very less.
Training for entities for compliance –
Initially, there would be a lot of objections for business entities in the operation of GST. All critical divisions of a business such as stores, marketing, finance/accounts would be required to understand the basics of GST as it is a new law. Entities could face a lot of objections in the transition phase. CAs could help the industry during this phase for smooth conversion by structuring available training programs.