Indian companies are rushing to accounting firms for help in preparing their accounting and information technology systems for a nationwide Goods and Services Tax system that will take effect on July 1.
The rush to compliance is creating a windfall for global accounting firms such as PricewaterhouseCoopers LLP, KPMG LLP, and Ernst & Young, which could make as much as 150 billion rupees ($2.3 billion) in extra consulting fees.
To address the demand, the firms are importing specialists from other countries to help local companies prepare for the shift.
But helping companies be fully compliant with the new system is difficult, as detailed guidelines aren’t yet available, reports Bloomberg.
“Corporate clients want more detailed guidelines and illustrations based on specific sectors,” Pratik Jain, a PricewaterhouseCoopers partner leading the firm’s indirect taxes arm in India, told Bloomberg. Jain told Bloomberg that clients have complained 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.”
Without more granular detail, it will be impossible for organized industries to comply from July 1, especially 40 million small-scale enterprises, 70 percent of which are unorganized and haven’t started the process of preparing their businesses, reports Bloomberg.
The complex process of converting more than 1 billion consumers into a unified, common market has also created demand for enterprise resource planning, reports Bloomberg, citing Ashish Mittal, co-founder of EasemyGST, an IT service provider in Gurugram near Delhi. About 200 inquiries were from medium to small businesses, Mittal told Bloomberg.